In the quest for yield, the REIT asset class often pops up as an investor’s favourite.
REITs are mandated to pay out at least 90% of their earnings as distributions to enjoy tax benefits.
Because of this, income investors rely on REITs to generate a steady stream of predictable, passive income.
With Singapore’s core inflation running at 3.8% in July and full-year inflation forecast to end between 3.5% to 4.5%, it is imperative that you park your money in inflation-beating stocks.
We shine the spotlight on four REITs that sport distribution yields of 5.4% or more.
These REITs could fit snugly in your investment portfolio or be added to your buy watchlist.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 193 properties across eight countries with assets under management (AUM) of S$13.5 billion as of 30 June 2023.
For its fiscal 2024’s first quarter (1Q FY2024) ending 30 June 2023, MLT saw gross revenue dip by 2.9% year on year to S$182.2 million.
Net property income (NPI) slid by 3.1% year on year to S$158.1 million.
The REIT’s distribution per unit (DPU), however, inched up 0.1% year on year to S$0.02271.
MLT’s trailing 12-month (TTM) DPU stood at S$0.09014, giving its units a trailing distribution yield of 5.4%.
The logistics REIT also reported strong portfolio metrics.
Portfolio occupancy came in at 97.1% with an average positive rental reversion of 4.2% for the quarter.
The REIT had just concluded a major acquisition of eight properties in Japan, South Korea, and Australia for S$904.4 million.
Its aggregate leverage stood at 39.5% with a low cost of debt of 2.5%.
The REIT manager is also undertaking capital recycling by divesting two properties in Malaysia in July this year along with a redevelopment project in Benoi Road in Singapore.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with 21 properties in Singapore, two in Germany, and three in Australia.
Total AUM stood at S$24.2 billion as of 31 December 2022.
CICT reported an encouraging set of financial numbers for its fiscal 2023’s first half.
Gross revenue increased by 12.7% year on year to S$774.8 million while NPI improved by 10.1% year on year to S$552.3 million.
DPU for 1H 2023 increased from S$0.0522 to S$0.053.
TTM DPU came in at S$0.1066, giving CICT’s units a trailing 12-month distribution yield of 5.6%.
CICT’s portfolio turned in a resilient performance even with inflation and interest rate headwinds.
For 1H 2023, the REIT’s retail portfolio achieved a positive rental reversion of 6.9% while its office portfolio saw a positive reversion of 9.6%.
In the same period, the retail portfolio also enjoyed a 6% year on year increase in retail sales and a 17.5% year on year jump in shopper traffic.
Portfolio occupancy stood healthy at 96.7% as of 30 June 2023.
Lendlease Global Commercial REIT (SGX: JYEU)
Lendlease Global Commercial REIT, or LREIT, is also a retail and office REIT with 313 Somerset and Jem in its Singapore portfolio along with a freehold interest in Sky Complex in Milan, Italy.
These properties have an appraised value of S$3.65 billion as of 30 June 2023.
LREIT reported a mixed financial performance for its fiscal 2023 (FY2023) ending 30 June.
Gross revenue and NPI more than doubled year on year to S$204.9 million and S$153.9 million, respectively, due to the full-year contribution from the acquisition of Jem Mall along with rental growth.
DPU for FY2023, however, slipped by 3.2% year on year to S$0.047 because of higher borrowing costs.
Units of LREIT sport a TTM distribution yield of 8.7%.
There is good news for investors, though, as the REIT reported positive rental reversions for both its retail (+4.8%) and office (+5.9%) portfolios.
The REIT also enjoyed a high tenant retention rate of 82.4% and has no refinancing risks for FY2024.
LREIT’s gearing stood at 40.6% with 61% of its loans hedged to fixed rates.
StarHill Global REIT (SGX: P40U)
StarHill Global REIT, or SGR, is a retail and office REIT with a portfolio of nine properties in Singapore, Australia, Malaysia, Japan, and China valued at around S$2.8 billion as of 30 June 2023.
For FY2023, gross revenue edged up 0.7% year on year to S$187.8 million while NPI improved by 2.2% year on year to S$147.8 million.
DPU stayed flat year on year at S$0.038, giving SGR’s units a TTM distribution yield of 7.8%.
The REIT achieved a high committed occupancy of 97.7% as of 30 June 2023.
Gearing remained fair at 36.7% and the REIT has no refinancing commitment until September 2024.
Around 84% of its total debt is hedged to fixed interest rates.
Both tenant sales and shopper traffic improved by 4.5% and 17% year on year, respectively, for the second half of FY2023.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
