Income-seeking investors will be pleased to know that REITs continue to offer a dependable source of passive income that they can rely on.
Despite the twin challenges of surging inflation and soaring interest rates, well-managed REITs with quality assets can hold their own and continue to churn out regular distributions.
Of course, the trick is to stick with REITs that are supported by strong sponsors and resilient tenants.
With the global economy teetering on the brink of a recession, investors should seek safety in well-known names with long track records.
The good news is that with interest rates poised to rise further, REITs are also seeing their distribution yields become more attractive.
Here are four Singapore REITs that pay out a distribution yield of 6% or higher.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, owns a portfolio of 85 properties in Singapore and 56 in the US comprising light industrial properties, business parks, and data centres.
The total assets under management (AUM) stood at S$8.8 billion as of 31 December 2022.
For the third quarter of MIT’s fiscal 2023 (3Q FY2023), gross revenue inched up 5% year on year to S$170.4 million.
Net property income (NPI) edged up 4.9% year on year to S$128.8 million but distribution per year declined by 2.9% year on year to S$0.0339.
The higher revenue and NPI were driven by contributions from new leases within the Singapore portfolio, but DPU fell because of higher operating and borrowing costs.
MIT’s trailing 12-month DPU came in at S$0.1373, giving its units a trailing distribution yield of 6%.
The industrial REIT maintained a gearing of 37.2% with close to three-quarters of its loans on fixed rates.
The redevelopment at the Kolam Ayer cluster is partially complete, with one of the blocks (165 Kallang Way) receiving its temporary occupation permit in November last year.
Starhill Global REIT (SGX: P40U)
Starhill Global REIT, or SGREIT, owns 10 retail cum office properties in Singapore, Australia, Malaysia, Japan, and China.
The total value of its portfolio stood at S$2.9 billion as of 31 December 2022.
SGREIT reported a decent financial result for its fiscal 2023’s first half (1H FY2023).
Gross revenue rose 4.1% year on year to S$94.7 million while NPI improved by 6.7% year on year to S$74.3 million.
DPU inched up 2.2% year on year to S$0.0182.
The REIT’s annualised DPU stood at S$0.0364, giving its units a forward distribution yield of 6.8%
SGREIT’s portfolio enjoyed a high occupancy of 97.1% with a long weighted average lease expiry (WALE) of 6.8 years by net lettable area (NLA).
Gearing stood at 36.3% with 84% of its borrowings hedged to fixed rates.
Lendlease Global Commercial REIT (SGX: JYEU)
Lendlease Global Commercial REIT, or LREIT, owns a portfolio comprising Jem and 313 Somerset in Singapore and Sky Complex in Milan, Italy.
These properties had a value of S$3.6 billion as of 30 June 2022.
LREIT reported a 159.6% year on year jump in gross revenue to S$101.7 million for 1H FY2023 with the addition of Jem into its portfolio.
NPI shot up 157.8% year on year to S$76.4 million.
DPU increased by 2.1% year on year to S$0.0245, with annualised DPU coming in at S$0.049.
LREIT’s units provide a forward distribution yield of 7.4%.
The REIT’s gearing ratio stood at 39.2% with a low weighted average cost of debt of 2.35%.
The good news is that LREIT’s portfolio enjoyed near full occupancy at 99.8% as of 31 December 2022.
Its WALE by NLA was also high at 8.3 years.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 105 industrial and commercial properties across Australia, Germany, Singapore, the UK and the Netherlands.
The REIT’s AUM stood at S$6.7 billion as of 31 December 2022.
For its fiscal 2022 (FY2022) ending 30 September 2022, FLCT saw revenue dip by 4.1% year on year to S$450.2 million.
Adjusted NPI fell by 3.7% year on year to S$342.1 million while DPU slid by 0.8% year on year to S$0.0762.
Units of FLCT provide a trailing distribution yield of 6.3%.
FLCT reported a strong set of operating metrics for its fiscal 2023’s first quarter (1Q FY2023).
Rental reversion hit positive 11% while the occupancy rate and WALE stood healthy at 95.9% and 4.6 years, respectively.
Aggregate leverage stood at just 27.9% as of 31 December 2022 with a low cost of borrowings of 1.7%.
78.7% of the REIT’s borrowings were on fixed rates.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust and Frasers Logistics & Commercial Trust.