REITs have characteristics of both equities and bonds.
Their regular distributions offer the stability of a recurring source of passive income.
At the same time, they can also demonstrate growth in their asset base that leads to a higher unit price.
This asset class is popular with income-seeking investors who are more than happy to park their money in well-managed REITs for dividends and long-term capital appreciation.
That said, it’s important to look for REITs with strong sponsors and a solid track record that can allow them to withstand economic stress.
With rising interest rates, REIT unit prices have been battered down, resulting in higher distribution yields across the board.
But if a REIT has quality tenants that contribute a steady source of rental income, the decline could be an opportunity to accumulate units at an attractive yield.
Here are five REITs that are yielding 5% or more.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT that owns 86 properties in Singapore and 57 properties in the US.
Total assets under management (AUM) stands at S$8.6 billion as of 31 December 2021.
MIT recently announced its fiscal 2022 third quarter (3Q2022) earnings.
Gross revenue shot up by 31.3% year on year to S$162.4 million, driven by contributions from the acquisition of 29 data centres in the US.
Net property income (NPI) climbed by 24.1% year on year to S$122.7 million while distribution per unit (DPU) rose by 6.4% year on year to S$0.0349.
The REIT’s trailing 12-month DPU stands at S$0.1361, and its units offer a trailing distribution yield of around 5.2%.
MIT had aggregate leverage of 39.9% as of end-2021 and a healthy adjusted trailing 12-month interest coverage ratio (ICR) of 5.9 times.
The REIT is currently working on a redevelopment project at Kolam Ayer 2 that will increase the gross floor area (GFA) of the properties there by around 70%.
Lendlease Global Commercial REIT (SGX: JYEU)
Lendlease Global Commercial REIT, or LREIT, invests in a portfolio of properties used for retail and/or office purposes.
Its portfolio comprises 313 Somerset, a retail mall in Singapore, and Sky Complex, which consists of three Grade-A office buildings in Milan, Italy. The REIT also owns a stake in Jem, an integrated development in Singapore.
For its fiscal 2021 (FY2021) ended 30 June 2021, LREIT reported a 5.6% year on year rise in gross revenue and a 14.6% year on year jump in DPU to S$0.0468.
Historical distribution yield stands at 5.5%.
Portfolio occupancy remained high at 99.8% and the gearing ratio stood at just 32%, allowing the REIT to tap on debt for acquisitions in the future.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns nine suburban retail malls and an office building in Singapore with an AUM of S$6.1 billion as of 30 September 2021.
For FCT’s FY2021, gross revenue more than doubled year on year to S$341.1 million due to the acquisition of AsiaRetail Fund’s portfolio of five suburban malls.
DPU jumped by 33.7% year on year to S$0.12085.
At S$2.27, units of FCT offer a trailing distribution yield of 5.3%.
Retail portfolio occupancy remained healthy at 97.2% as of 31 December 2021 while portfolio tenant sales for the October and November 2021 period were nearly on par with pre-COVID levels.
For December, tenant sales exceeded pre-pandemic levels.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, has a portfolio comprising 22 properties in Singapore and two in Frankfurt, Germany.
Property AUM stood at S$22.3 billion as of 31 December 2020.
CICT’s fiscal 2021’s first half (1H2022) earnings were encouraging.
Gross revenue doubled year on year to S$645.7 million due to the merger with CapitaLand Commercial Trust.
DPU jumped from S$0.0296 to S$0.0518 for the half-year.
Annualised DPU stands at S$0.1036 and CICT’s units offer a forward distribution yield of around 5.2%.
For its 3Q2021 business update, the REIT reported committed occupancy of 94.4% while tenant sales have recovered to almost 84% of pre-COVID levels.
CICT also announced the sale of JCube mall in Jurong for S$340 million, leading to an estimated net gain of S$56.7 million for the REIT.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, has a portfolio of 103 industrial and commercial properties worth S$7.3 billion as of 30 September 2021.
The properties are located in Singapore, Germany, the UK, Australia, and the Netherlands.
For FY2021, FLCT reported a 41.4% year on year jump in revenue to S$469.3 million while adjusted NPI climbed by 37.5% year on year to S$270.1 million.
DPU rose by 7.9% year on year to S$0.0768.
Units of FLCT offer a trailing distribution yield of 5.3%.
The REIT recently announced the divestment of Cross Street Exchange in Singapore for S$810.8 million.
Part of the proceeds will be used to reduce the REIT’s aggregate leverage to 29.3%, increasing its debt headroom to S$3 billion to allow it more room to tap on debt for further acquisitions.
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Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust and Frasers Logistics & Commercial Trust.