Fortunately, Singapore is a veritable hub for REITs, offering investors choices aplenty.
It’s an opportune time to buy REITs now.
Firstly, with impending interest rate hikes in the US and the UK, jittery investors have been pushing down the unit prices of REITs.
As REITs are heavily reliant on debt financing, an increase in interest rates normally dampens demand for these property-laden securities.
Any sell-down will open up opportunities to scoop REITs up at attractive dividend yields.
Secondly, with many countries disseminating COVID-19 vaccines to their populations, the world should also be gearing up for a sustained recovery.
That said, it’s important to hunt for REITs with clear catalysts that can take the business to the next level.
Here are five promising REITs you can consider for your watchlist this month.
ESR-REIT (SGX: J91U)
ESR-REIT is an industrial REIT that owns a portfolio of 58 industrial properties in Singapore worth around S$3.2 million as of 30 June 2021.
The REIT’s portfolio occupancy stands at 91.7% and its properties house 360 tenants from different trade sectors.
For its fiscal 2021 first half (1H2021), the REIT reported a 5.4% year on year increase in gross revenue while net property income (NPI) rose 8.4% year on year to S$87 million.
Distribution per unit (DPU) climbed by 14.3% year on year to S$0.01554.
Apart from the good results, the REIT also recently announced a proposed merger with ARA Logos Logistics Trust to create Singapore’s fifth-largest REIT by asset size.
If the deal goes through, it will not just increase ESR-REIT’s profile but also result in a boost to DPU.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, is a hospitality trust with assets under management (AUM) of S$2.9 billion as of 30 June 2021.
The stapled trust owns 15 hotels and two resorts spread across Singapore, New Zealand, the UK, the Maldives, to name a few.
CDLHT’s DPU for 1H2021 suffered a 19.2% year on year decline due to overall lower occupancy.
However, the trust’s manager recently expanded its investment mandate to include other types of real estate such as rental housing, student accommodation and senior housing to mitigate the effects of the pandemic.
CDLHT did not waste any time working on its new mandate.
In August, the trust made its maiden investment in the build-to-rent sector in Manchester, UK, for a total consideration of S$136 million.
Unitholders should rejoice as the transaction not only diversifies the REIT’s income sources but also results in a 2.2% uplift to its fiscal 2020’s DPU.
Ascott Residence Trust (SGX: HMN)
Ascott Residence Trust, or ART, is a hospitality trust with an AUM of S$7.3 billion as of 30 June 2021.
With CapitaLand Investment (SGX: 9CI) as its sponsor, the stapled trust owns 89 properties located in 39 cities spread across 15 countries.
For 1H2021, ART reported an 11% year on year decline in revenue to S$185 million.
However, its distributable income jumped 96% year on year to S$63.8 million, mainly due to a one-off S$20 million divestment gain during the period.
DPU nearly doubled year on year from S$0.0105 to S$0.0205.
Like CDLHT, ART has also expanded its mandate to include student accommodation assets.
Last month, the REIT acquired its third student accommodation asset in Texas, USA, for US$70 million. This purchase is expected to increase its FY2020 DPS by around 1.5%.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT is an industrial REIT that owns a portfolio of 28 properties, 26 of which are in Singapore and the other two in Australia.
The portfolio is valued at around S$1.7 billion as of 30 September 2021.
The REIT reported a good set of results for its fiscal 2022 first half (1H2022).
Gross revenue climbed by 13% year on year to S$65.2 million while NPI jumped by 19.4% year on year to S$47.7 million.
Along with the good results, DPU rose by 18.8% year on year to S$0.0475.
The REIT’s aggregate leverage, at just 24.7%, provides it with significant debt headroom to borrow more for yield-accretive acquisitions.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, owns a diversified portfolio of grocery-anchored and necessity-based properties in the US.
As of 30 June 2021, the REIT owns 22 properties worth around US$587.1 million.
UHREIT has reported a respectable set of results for 1H2021.
Gross revenue dipped slightly by 3.4% below forecast to US$26.8 million due to the impact of COVID-19.
DPU, however, was 1% above forecast at US$0.0305.
The REIT recently conducted its first acquisition, that of two grocery-anchored properties for around US$78.25 million.
This acquisition will raise pro-forma FY2020 DPU by 1.75% from US$0.0481 to US$0.0489.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.