Real estate is one of the most popular asset classes in Singapore.
Known globally as a hub for real estate investment trusts (REITs), the Lion City is home to 44 REITs and property trusts with a total market capitalization of S$115 billion as of 31 December 2021.
It’s no secret why REITs are so popular.
They offer investors the opportunity to access property investments and collect a steady stream of income through distributions.
These consistent distributions make REITs a great vehicle for passive income generation.
In recent weeks, REITs have seen their unit prices come under heavy pressure due to an impending rise in interest rates.
This dip in price represents a perfect opportunity for new investors to scoop up some shares.
Here are four high-quality REITs for you to consider buying.
Ascendas REIT (SGX: A17U)
Ascendas REIT, or A-REIT, is one of Singapore’s largest REITs and manages a portfolio of 217 investment properties worth S$16.3 billion.
A-REIT is a popular option for new investors.
Industrial REITs such as A-REIT have proven their mettle as a reliable investment, as they have displayed resilience throughout the COVID-19 pandemic
In addition, the REIT boasts a broad and well-diversified tenant base.
A-REIT’s more than 1,570 tenants hail from over 20 different industries, including growing sectors such as technology, logistics and life sciences.
More impressively, no single tenant contributes more than 3.3% of the REIT’s monthly gross revenue.
A-REIT recently reported a strong set earnings for its fiscal year 2021 (FY2021).
Gross revenue rose by 16.9% year on year to S$1.23 billion, while distribution per unit (DPU) grew 3.9% year on year to S$0.15258.
At current prices, A-REIT offers a distribution yield of 5.4%.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns and manages a portfolio of nine suburban malls and one office building in Singapore.
FCT’s malls are located in suburban areas, close to the heartlands where most Singaporeans live.
Such malls have recovered quickly from the effects of the pandemic.
With more people working from home, spending on food and groceries has been diverted away from the business district to suburban malls.
In FCT’s business update for its fiscal 2022 first quarter (1Q22), it reported that even though shopper traffic remains depressed at around 66% of pre-COVID levels in December 2021, tenant sales for that month have surpassed 2019 figures.
FCT also has a low gearing ratio of 34.5% as of 31 December 2021, leaving it well positioned to make further acquisitions to grow its DPU.
The REIT’s DPU for FY21 was $0.12085, which translates to a dividend yield of 5.2% at current prices.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is one of Singapore’s largest industrial REITs.
MIT manages a portfolio of 143 properties across Singapore and North America, including data centres, hi-tech buildings, business park buildings and flatted factories.
Similar to A-REIT, MIT’s size is the REIT’s core strength.
With over 2,000 tenants across a range of trade sectors, MIT is well-protected from unexpected market conditions as seen from its reliable performance throughout the pandemic.
In MIT’s latest earnings report for its fiscal 2021/22 third quarter (3Q22) ended 31 December 2021, the REIT announced some impressive figures.
Gross revenue grew 31.3% year on year from S$123.7 million to S$162.4 million, while net property income (NPI) reached S$122.7 million, growing 24.1% year on year.
The good showing allowed MIT to raise its DPU by 6.4% year on year, keeping the REIT on track to maintain its record of raising distributions every year since 2012.
At the current unit price of S$2.57, MIT offers a trailing 12-month DPU of 5.3%.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns a portfolio of 21 data centres across nine countries.
Data centres have become a vital cog of the global economy as the rate of digitalization has exploded in recent years.
As such, Keppel DC REIT’s data centres stand to benefit from growing demand.
The Singapore government has also recently lifted a moratorium on the construction of new data centres, which could benefit experienced players such as Keppel DC REIT.
In its earnings report for FY21, Keppel DC REIT posted modest improvements in performance.
Gross revenue rose slightly by 2.1% year on year to S$271.1 million, while NPI rose 1.6% year on year to S$248.2 million.
The REIT paid out a DPU of S$0.09851 in FY21, 7.4% higher than the year before.
At a unit price of S$2.17, Keppel DC REIT’s trailing 12-month dividend yield stands at 4.5%.
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Disclosure: Herman Ng owns shares of Ascendas REIT and Mapletree Industrial Trust.
