3 Resilient Overseas REITs You Can Add to Your Watchlist

It’s no secret that many local investors feel more comfortable investing in Singapore stocks.

Familiarity and accessibility are major factors for this home bias.

Businesses that are domiciled in Singapore also allow investors to attend annual general meetings to ask questions, thereby improving communication lines between investor and the management team.

The same applies for REITs.

Investors tend to warm up to REITs with local properties due to familiarity with the assets.

However, I would argue that it’s possible to invest safely in overseas REITs based on information provided on their assets and financial cum operating performance.

Investors should embrace the opportunity to gain exposure to different asset classes and regions as a form of diversification.

Some of these REITs also sport attractive dividend yields.

Here are three overseas REITs that have shown themselves to be resilient during this pandemic.

United Hampshire US REIT (SGX: ODBU)

United Hampshire US REIT invests in a diversified portfolio of four US self-storage properties and also 18 retail properties that are grocery-anchored and necessity-based.

Such assets include non-discretionary spending businesses such as supermarkets and grocers.

The portfolio has an appraised value of US$585.5 million as of 31 March 2021.

In its fiscal 2021 first quarter (1Q2021) business update, the REIT reported gross revenue of US$13.5 million, slightly lower than its original forecast.

Distributable income, however, inched up 1.3% higher than forecast.

The results demonstrated the resilience of this asset class as occupancy for its grocery and necessity-based assets remained high at 93.9% and sported a weighted average lease expiry (WALE) of 8.1 years.

CEO Robert Schmitt observed that the REIT’s tenants provide essential services and most have adopted successful omni-channel marketing strategies.

Some of the anchor tenants within the portfolio include major companies such as Walmart (NYSE: WMT) and Home Depot (NYSE: HD). Both retailers reported year on year sales growth for the fourth quarter of 2020.

On the self-storage front, the REIT’s four properties have seen occupancy rates move up.

The REIT is going ahead with a development for a new Publix store located in Florida.

This new property was opened in April this year and saw 57% of its space leased to Beall’s Outlet Stores.

As the REIT’s properties are expected to continue operating despite the pandemic, unitholders can expect stable distributions to continue uninterrupted.

Sasseur REIT (SGX: CRPU)

Sasseur REIT is a REIT that owns four retail outlet malls located in three cities in China, namely Chongqing, Kunming and Hefei.

These malls have a total net lettable area of close to 313,000 metres.

For 1Q2021, the REIT reported rental income of RMB 157.4 million, up 23.7% year on year.

The rise was attributed to a strong recovery in China along with asset enhancement initiatives undertaken by the REIT manager.

Of note, the variable component of rental income, which is based on a percentage of tenants’ sales, more than doubled year on year to RMB 51.9 million.

The surge reflects the recovery in tenant sales that has, in turn, benefitted the REIT.

Income available for distribution soared by 47.8% year on year to RMB 23.6 million.

Distribution per unit (DPU) for the quarter jumped by 32% year on year to S$0.01759.

The REIT’s portfolio occupancy remained high at 93.5% as of 31 March 2021 and aggregate leverage was low at just 27.6%, offering ample opportunity for the REIT to gear up for acquisitions.

EC World REIT (SGX: BWCU)

EC World REIT is a specialised industrial REIT that invests in a portfolio of eight properties located at the Yangtze River Delta in China.

These properties are used mainly for e-commerce, supply chain management and logistics purposes.

For 1Q2021, the REIT reported that gross revenue climbed 30.9% year on year to S$30.8 million.

The rise was driven by the absence of rental rebates to tenants as well as a strengthening of the RMB.

Net property income rose by the same percentage to S$27.7 million.

DPU after retention jumped by 32.3% year on year to S$0.01532.

The portfolio maintained a high occupancy of 99.1% as of 31 March 2021.

Distribution yield, on an annualised basis, stands at around 7.7% at a share price of S$0.80.

The REIT successfully renewed a major lease at Hengde Logistics, extending WALE to 3.2 years by gross rental income.

With aggregate leverage at 38.3%, the REIT has some room to take on more debt for future acquisitions.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

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