REITs are an effective investment vehicle for income-seeking investors.
This asset class is mandated to pay out at least 90% of its earnings as distributions, thereby providing investors with a regular stream of dividend income.
During times of uncertainty, it makes sense to seek out REITs that can provide a sense of security.
You should look for certain attributes when it comes to stable and dependable REITs.
They need to have quality assets, be backed by a strong sponsor, and possess a track record of increasing their distribution per unit (DPU) through good times and bad.
Here are four solid Singapore REITs that you can consider owning for a lifetime.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with 85 properties in Singapore and 56 in the US comprising data centres, light industrial buildings and flatted factories.
Its assets under management (AUM) stood at S$8.8 billion as of 30 June 2022.
MIT is backed by a strong sponsor in Mapletree Investments Pte Ltd, a global real estate development and investment company with an AUM of S$78.7 billion as of 31 March 2022.
The industrial REIT reported an encouraging set of earnings for its fiscal 2023’s first quarter (1Q2023).
Gross revenue jumped 31% year on year to S$167.8 million while net property income (NPI) climbed 24% year on year to S$129.9 million.
DPU inched up 4.2% year on year to S$0.0349.
MIT’s overall occupancy rate stayed high at 95.3% amid improved occupancies across all property segments in Singapore and the US.
The REIT’s gearing ratio stood at 38.4% and it has 72.3% of its borrowings on fixed rates.
There’s room for DPU growth as MIT is currently redeveloping three properties at Kolam Ayer for S$300 million, with expected completion in the first half of 2023.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban malls worth a total of S$6.1 billion as of 30 June 2022.
FCT’s portfolio is well-diversified, with no single property accounting for more than one-fifth of the total net lettable area.
54.4% of its tenants are also in essential services, thus buffering the REIT’s rental income against a sustained downturn.
In addition, FCT also has a strong sponsor in Frasers Property Limited (SGX: TQ5) or FPL.
FPL is a property giant with an AUM of around S$40.3 billion as of 30 September 2021.
The retail REIT has demonstrated resilience by raising its DPU by 2.3% year on year for its fiscal 2022’s first half to S$0.06136.
Its occupancy rate stood high at 97.1% with retail tenant sales up 23% year on year and are now at an average of 10% above pre-COVID levels.
With aggregate leverage at 33.9%, FCT still has room to acquire to further grow its DPU.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, has a portfolio of 105 properties in Singapore, the UK, Australia, Germany and the Netherlands with an AUM of S$6.5 billion as of 30 June 2022.
FLCT’s sponsor is also FPL and the REIT enjoys a high occupancy rate of 96.5% across all its properties.
The logistics & commercial REIT has built up a great track record of growing its AUM from S$1.6 billion in 2016 to the current S$6.5 billion.
FLCT’s DPU has also grown from S$0.0701 in FY2017 to an annualised S$0.077 for 1H2022.
The top 10 tenants only take up a quarter of gross rental income (GRI), while no more than one-fifth of GRI is expiring in any single fiscal year.
Aggregate leverage, at 29.2%, offers FLCT a debt headroom of close to S$2.9 billion for DPU-accretive acquisitions.
Coupled with a low cost of debt of 1.6% and with 80% of its borrowings on fixed rates, investors should not fret about a sharp jump in finance costs as interest rates surge.
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.
Its total AUM stood at S$24.2 billion as of 31 December 2021.
CICT also has a strong sponsor in CapitaLand Investment Limited (SGX: 9CI).
For 1H2022, the REIT saw its DPU increase from S$0.0518 to S$0.0.522 as gross revenue and NPI rose 6.5% and 6.2% year on year, respectively.
CICT has locked in 81% of its borrowings on fixed rates with a low average cost of debt of 2.4%.
The REIT has a diversified tenant base where no single tenant contributes more than 5% of CICT’s GRI.
CICT’s manager continues to curate the REIT’s mall mix by offering new retail and lifestyle offerings.
The REIT could also be bidding for retail properties being offered for sale by Mercatus, a unit of NTUC.
Is it a good time to buy into Singapore REITs? If you’ve thought about it, then our latest REITs guide will be an essential read. This exclusive pdf report shows you why REITs are still excellent assets, what sectors to look out for and how to find good REITs today. The info inside can help you build a solid retirement portfolio. Click here to download it for FREE.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust and Frasers Logistics & Commercial Trust.
