Income-seeking investors have leaned on this reliable asset class for two decades for their predictable distributions.
Investors are seeking certainty by sifting through the property profiles of the myriad of REITs listed in Singapore.
Retail REITs are one such sub-sector as they provide necessity-based shopping that helps to anchor a REIT’s rental income during challenging economic times.
Income investors are in luck.
Here are four solid retail REITs that pay out a distribution yield higher than 5.5% that they can add to their buy watchlists.
Starhill Global REIT (SGX: P40U)
Starhill Global REIT, or SGREIT, is a retail cum office REIT with a portfolio of 10 predominantly retail properties in six cities.
Its assets under management (AUM) stood at around S$2.9 billion.
The REIT has a strong sponsor in the Malaysian property group YTL Corporation Berhad (KLSE: 4677).
SGREIT reported a resilient set of financials for its fiscal 2023’s first quarter (1Q2023) ending 30 September 2022.
Revenue rose 6.2% year on year to S$47.6 million while net property income (NPI) improved by 8.4% year on year to S$37.2 million.
The portfolio also enjoyed a high committed occupancy of 96.9% and a long weighted average lease expiry (WALE) of seven years.
For FY2022, SGREIT paid out a distribution per unit (DPU) of S$0.038, translating into a trailing distribution yield of 7.4%.
Meanwhile, gearing stood at just 36.5% for the REIT as of 30 September, allowing it sufficient headroom to tap on debt for further DPU growth.
Around 84% of its borrowings were on fixed rates, thus mitigating any sharp increase in finance costs.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail cum commercial REIT with 21 properties in Singapore, two in Germany, and three in Australia.
Total AUM stood at S$24.2 billion as of 31 December 2021.
CICT has a strong sponsor in real estate giant CapitaLand Investment Limited (SGX: 9CI).
The REIT released its fiscal 2022’s third quarter (3Q2022) business update recently and reported a set of strong financial and operating numbers.
Zooming in on its retail properties, the occupancy level stood healthy at 96.8% as of 30 September 2022.
The tenant retention rate for the first nine months of 2022 (9M2022) was high at 88.5%.
In addition, 9M2022 shopper traffic and tenant sales surged by 21.9% and 21.3% year on year, respectively.
CICT’s retail properties also saw a positive rental reversion of 0.6% for incoming average rents versus outgoing rental rates.
The statistics above paint a healthy picture of the REIT’s retail segment.
The trailing 12-month DPU for CICT came in at S$0.1044, giving its units a trailing distribution yield of 5.6%.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns nine retail suburban malls and an office building in Singapore with an AUM of S$6.2 billion as of 30 September 2022.
For fiscal 2022 (FY2022) ending 30 September, FCT reported a 4.6% year on year rise in gross revenue to S$356.9 million while NPI increased by 4.9% year on year to S$258.6 million.
DPU inched up 1.2% year on year to S$0.12227, giving FCT’s units a trailing distribution yield of 6.2%.
FCT’s portfolio of malls is doing well, with committed occupancy standing relatively high at 97.5%.
Portfolio shopper traffic is also up 12.4% year on year, and tenant sales have shot up 11.3% year on year, surpassing pre-COVID levels by 10% on average.
The REIT’s average leverage ratio stood low at 33%, opening the retail REIT to tap on debt for potential acquisitions to boost DPU.
71% of FCT’s borrowings are hedged to fixed rates, and the REIT maintained a healthy interest cover ratio of around 5.2 times.
Sasseur REIT (SGX: CRPU)
Sasseur REIT is a retail outlet mall REIT with four mall assets located in Chongqing, Kunming and Hefei cities in China.
The retail REIT reported a healthy portfolio occupancy rate of 96% for its fiscal 2022’s second quarter (2Q2022).
Its DPU also edged up 1.1% year on year to S$0.0341 for the first half of 2022 (1H2022).
Sasseur REIT’s trailing 12-month DPU stood at S$0.07141, giving its units a trailing distribution yield of 10%.
The REIT’s outlet malls were affected by China’s COVID-zero policy, but June 2022 saw sales rise 4% year on year in an encouraging sign that conditions are improving.
Sasseur REIT also has a low aggregate leverage level of 26.5% with close to S$905 million of debt headroom for acquisitions.
With 71.6% of its borrowings pegged to fixed rates, investors should worry less about a sharp rise in finance costs.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.