It’s no secret that Singapore REITs (S-REITs) have come under pressure in recent months.
A combination of high inflation, rising interest rates and weak sentiment has contributed to this weakness.
Investors are justifiably worried as to whether S-REITs can maintain their distributions during trying times.
Hence, it’s important to select REITs with favourable attributes such as high-quality and well-situated properties, a strong sponsor, and a track record of rising distribution per unit (DPU).
And with many S-REITs touching a 52-week low due to pessimism, distribution yields have also risen, opening up great opportunities to scoop up quality REITs with high yields.
Here are five solid S-REITs that you can consider adding to your buy watchlist.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT owns a portfolio of 21 data centres across nine countries with assets under management (AUM) of S$3.5 billion as of 30 June 2022.
The REIT is backed by a strong sponsor in blue-chip conglomerate Keppel Corporation Limited (SGX: BN4), which also provides a ready pipeline of around S$2 billion worth of potential data centre assets for acquisitions.
Keppel DC REIT reported an admirable performance for its fiscal 2022’s first half (1H2022), with gross revenue inching up 0.3% year on year to S$135.5 million.
DPU rose 2.5% year on year to S$0.05049 due to significantly higher finance income arising from its investment in M1’s bonds and preference shares. The forward distribution yield stands at 5.9%.
The REIT’s aggregate leverage stood at 35.3% as of 30 June 2022, allowing it sufficient debt headroom for further accretive acquisitions.
Keppel DC REIT’s average cost of debt remained low at 1.9% with three-quarters of its borrowings on fixed rates, thus mitigating a sharp rise in interest costs.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a portfolio of 185 logistics properties across eight countries with an AUM of S$13 billion as of 30 June 2022.
MLT is managed by Mapletree Investments Pte Ltd, a strong sponsor that owns and manages S$78.7 billion of properties as of 31 March 2022.
The logistics REIT continues to report a healthy financial performance for its fiscal 2023’s first quarter (1Q2023).
Gross revenue increased by 14.6% year on year to S$187.7 million while net property income (NPI) rose 13.2% year on year to S$163.2 million.
DPU increased by 5% year on year to S$0.02268, and MLT’s units have a forward distribution yield of 5.9%.
The REIT has 80% of its debt hedged to fixed rates and continues to enjoy a high occupancy rate of 96.8% as of 30 June 2022.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with nine suburban retail malls in its portfolio worth S$6.1 billion.
FCT’s sponsor is property giant Frasers Property Limited (SGX: TQ5), or FPL.
The REIT’s committed occupancy stayed high at 97.1% as of 30 June 2022 and tenant sales were up 10% above pre-COVID levels for its fiscal 2022’s third quarter (3Q2022).
Aggregate leverage also remained low at 33.9%, with 69% of total borrowings on fixed rates.
For 1H2022, FCT paid out a DPU of S$0.06136.
Based on an annualised DPU of S$0.12272, its units provide a forward distribution yield of 5.7%.
CapitaLand China Trust (SGX: AU8U)
CapitaLand China Trust, or CLCT, is a China-focused S-REIT that owns 11 retail properties, five business parks, and four logistics parks.
The total AUM for CLCT stood at RMB 24.8 billion as of 31 December 2021 and all three categories of property enjoyed high occupancy rates above 90%.
The Chinese-focused REIT also has a strong sponsor in CapitaLand Investment Limited (SGX: 9CI).
CLCT paid out a DPU of S$0.041 for 1H2022 as a portion of its distributable income was retained to help tenants due to China’s COVID-zero policy.
The REIT offers a forward distribution yield of 8% based on its annualised DPU of S$0.082.
CLCT has 71% of its loans on fixed rates with a gearing of 38.6% as of 30 June 2022.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 105 properties in five countries worth S$6.5 billion as of 30 June 2022.
FLCT’s sponsor is also FPL, and the REIT enjoyed a high occupancy rate of 96.5%.
The REIT has a well-diversified tenant profile with no single tenant making up more than 5.1% of its gross rental income.
Furthermore, FLCT has low aggregate leverage of 29.2% with 80.6% of its borrowings at fixed rates.
1H2022 saw the REIT pay out a DPU of S$0.0385.
The annualised DPU stands at S$0.077, giving its units a forward distribution yield of 6.3%.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT and Frasers Logistics & Commercial Trust.
