Saving is a very useful habit.
Over time, you will accumulate a tidy sum of money that you can choose to use as you please.
One option is to spend it on a nice meal or a relaxing holiday.
But an even better idea is to allocate some of it to income-generation stocks that can help to increase your flow of passive income.
REITs are one asset class that appeals to income-seeking investors as they need to pay out at least 90% of their profits as distributions.
Armed with S$20,000, here are four reliable and resilient Singapore REITs I will consider buying.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of 10 suburban retail malls and one office building.
Its assets under management (AUM) stood at S$6.9 billion as of 31 March 2023.
FCT’s sponsor is property giant Frasers Property Limited (SGX: TQ5), which has total assets of S$40.2 billion as of 30 September 2022.
For its fiscal 2023 first half (1H FY2023) ending 31 March 2023, FCT reported a respectable financial performance with revenue rising 6.5% year on year to S$187.6 million.
Net property income (NPI) increased by 5.7% year on year to S$138 million but distribution per unit (DPU) stayed flat year on year at S$0.0613.
FCT’s units offer an annualised distribution yield of 5.7%.
For its third quarter (3Q FY2023), retail portfolio occupancy stood high at 98.7% while both shopper traffic and tenant sales improved by 16% and 5% year-on-year, respectively.
The retail REIT is undertaking an asset enhancement initiative (AEI) at Tampines 1 Mall which is scheduled for completion in 3Q 2024 with more than 90% of the AEI space pre-committed to date.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail cum commercial REIT with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.
These assets have an AUM of S$24.2 billion as of 31 December 2022.
CICT is anchored by a reputable real estate sponsor in CapitaLand Investment Limited (SGX: 9CI).
The REIT achieved a respectable result for the first half of 2023 (1H 2023) when it reported year-on-year increases in both revenue and NPI.
DPU increased from S$0.0522 in 1H 2022 to S$0.053.
The REIT’s trailing 12-month DPU stood at S$0.1066, giving its units a trailing distribution yield of 5.9%.
CICT also displayed robust operating metrics with portfolio committed occupancy at 96.7%.
Positive rental reversion was logged for both its retail and commercial divisions at +6.9% and +9.6%, respectively, for 1H 2023.
Tenant sales and shopper traffic rose 6% and 17.5% year on year for CICT’s retail portfolio, respectively.
The REIT has ongoing AEI at CQ @ Clarke Quay that should be completed by late 2023 while also revealing new food and beverage, fashion, and lifestyle offerings at Raffles City Singapore.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across nine countries with an AUM of S$3.7 billion as of 30 June 2023.
The REIT has Keppel Corporation Limited (SGX: BN4) as a sponsor with a potential acquisition pipeline of more than S$2 billion in data centre assets.
For 1H 2023, gross revenue inched up 3.6% year on year to S$140.5 million with NPI increasing by 3.3% year on year to S$127.4 million.
DPU remained flat year on year at S$0.05051.
Annualised DPU came in at S$0.10102, giving Keppel DC REIT’s units a trailing distribution yield of 5%.
The REIT enjoyed a high portfolio occupancy rate of 98.5% as of 30 June 2023 with a long portfolio weighted average lease expiry of eight years, giving good visibility for rental income.
Also, more than half the portfolio’s leases have built-in rental escalation clauses that help rental income to grow in line with inflation.
Data centre demand is poised to remain strong with growing hyperscale demand and the adoption of new technologies such as generative artificial intelligence.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with 141 properties spread out across six property segments.
AUM stood at S$8.8 billion as of 30 June 2023.
MIT has a strong sponsor in Mapletree Investments Pte Ltd, a wholly-owned subsidiary of investment firm Temasek Holdings.
The REIT reported a mixed set of earnings for its fiscal 2024 first quarter (1Q FY2024) ending 30 June 2023.
Revenue edged up 1.7% year on year to S$170.6 million while NPI improved by 0.7% year on year to S$130.8 million.
DPU, however, slid 2.9% year on year to S$0.0339 on higher finance expenses and a larger unit base.
The annualised DPU of S$0.1356 means MIT’s units offer a forward distribution yield of 6.1%.
The REIT had just completed the acquisition of a data centre in Osaka, Japan, for around S$505.9 million.
With an aggregate leverage of 38.2%, MIT still has room to tap on debt for further acquisitions.
The portfolio also enjoyed a positive rental reversion of 5.3% for renewal leases.
Not sure which REIT to put your money in? Use our 7-step REIT checklist to find one that fits into your retirement plan. Checklist is inside our latest FREE report “Singapore REITs Retirement Plan”. Click here to download it now. Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of Keppel DC REIT and Mapletree Industrial Trust.
