The REIT sector has been taking it on the chin in the past year.
A combination of high inflation and surging interest rates has dampened sentiment for the asset class.
However, income-focused investors can still rely on REITs to generate a dependable stream of dividends as they need to pay out 90% of their profits as distributions.
This fact, coupled with the presence of physical assets, makes REITs a viable choice as an income instrument for your retirement.
Several REITs sport high distribution yields that are enticing, but you need to also review them to assess their risks and rewards.
Here are four Singapore REITs with distribution yields of 7% or more that you may wish to add to your buy watchlist.
ESR-LOGOS REIT (SGX: J91U)
ESR-LOGOS REIT, or ELR, is an industrial REIT with 82 properties in Singapore, Australia and Japan.
As of 31 December 2022, the REIT’s portfolio comprised logistics properties, business parks, and general industrial properties valued at S$5.7 billion.
ELR was formed from the merger of ESR-REIT with ARA LOGOS Logistics Trust which was completed in May last year.
The newly-formed REIT reported an encouraging set of earnings for 2022.
Revenue jumped 42.3% year on year to S$343.2 million while net property income (NPI) climbed 41% year on year to S$244.2 million.
Distribution per unit (DPU) inched up 0.4% year on year to S$0.03, giving ELR’s units a trailing distribution yield of 9.2%.
The industrial REIT reported encouraging metrics – a high occupancy rate of 92.7% along with a positive rental reversion of 11.8%.
ELR’s gearing stood at 41.8% but 72% of its loans were on fixed-rate hedges.
Just two months ago, the REIT launched an equity fundraising to raise S$300 million to fund potential acquisitions, redevelopments, and asset enhancement initiatives (AEIs).
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, owns a portfolio of 29 industrial, logistics, and business park assets.
These properties are spread out across Singapore (26) and Australia (3).
AAREIT reported a commendable set of earnings for the first nine months of fiscal 2023 (9M FY2023) ending 31 December 2022.
Gross revenue rose 22.7% year on year to S$125.2 million while NPI increased 23% year on year to S$92 million.
DPU edged up 2.7% year on year to S$0.0729, with annualised DPU calculated at S$0.0972.
AAREIT’s units offer a forward distribution yield of 7.1%.
The industrial REIT has achieved a consistently high occupancy rate along with positive rental reversions.
Portfolio occupancy came in at 97.8% with a positive rental reversion of 21.2%.
The good news is that AAREIT’s aggregate leverage stood at just 36.4%, opening the REIT up to further acquisitions through debt funding.
Also, close to 88% of its borrowings are on fixed rates, thus mitigating a surge in finance costs.
CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust, or CLINT, owns a portfolio of eight IT business parks, a logistics park, one industrial facility and three data centre developments in India.
The assets are spread out across Bangalore, Chennai, Hyderabad, Pune, and Mumbai with assets under management of S$2.5 billion.
2022 saw CLINT report a 9% year on year increase in total property income to S$210.6 million.
NPI improved by 7% year on year to S$166.8 million with DPU rising by 5% year on year to S$0.0819.
The industrial REIT’s units yielded 7.7% based on the unit price of S$1.07.
CLINT’s portfolio occupancy improved by five percentage points during the year to end off 2022 at 92%.
Its gearing ratio stood at 37% with around three-quarters of its debt on fixed rates.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, has a portfolio of 21 grocery and necessity-based retail properties along with two self-storage properties located in eight states in the US.
The value of the portfolio stood at around US$738.7 million as of 31 December 2022.
For 2022, the REIT’s gross revenue climbed 22.2% year on year to US$67.5 million.
NPI rose 12.2% year on year to US$47.1 million but DPU dipped by 3.6% year on year to US$0.0588.
Adjusted DPU, which excludes top-ups and stipulated damages, rose 9.3% year on year to US$0.0585.
Based on the DPU of US$0.0588, UHREIT’s units offer a trailing distribution yield of 12.8%.
The REIT enjoyed a high committed occupancy rate of 96.9% along with a long weighted average lease expiry of 7.5 years.
The manager had successfully recycled capital from the sale of two self-storage properties into higher-yielding grocery assets during the year.
Aggregate leverage stood at 41.8% with 81.4% of UHREIT’s debt on fixed rates.
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.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
