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3 Solid REITs That Offer Investors Exposure to Overseas Properties

Royston Yang

Investors are always on the hunt for rock-solid, growing REITs to add to their portfolios for a mix of both capital gains and stable dividend income. While many REITs offer a portfolio mix consisting of properties in different countries, some investors may desire a “pure-play” strategy in order to enjoy the benefits of indirectly owning the properties within just one country.

Here are three pure-play REITs whose portfolios contain properties in just one country. After a quick look at some numbers, investors may decide if the growth potential of some (or all) of these markets and countries make these REITs intriguing candidates for their portfolios.

1. Ascendas India Trust

Ascendas India Trust (SGX: CY6U) was listed in 2007 and is the first Indian property trust in Asia. Its mandate is to own income-generating properties used primarily as business spaces in India. Its portfolio consists of seven world-class IT business parks and six modern warehouses in India, and the REIT is managed by Ascendas Property Fund Trustee Pte Ltd, which is a subsidiary of Ascendas-Singbridge Group.

Distribution per unit (DPU) for the REIT increased by 20% year on year to 7.33 Singapore cents for the fiscal year 2018-2019. This occurred even though total property income declined by 3% year on year in Singapore dollar terms due to the depreciation of the Indian rupee against the Singapore dollar. At AIT’s last traded price of S$1.39, the REIT offers a historical yield of 5.2%.

AIT also recently announced that it will be financing the construction of an additional warehouse in western India and acquire it upon completion for S$42.1 million. This acquisition is expected to further increase AIT’s DPU by around 0.03 Singapore cents.

2. Sasseur REIT

Sasseur REIT (SGX: CRPU) is the first outlet mall REIT listed in Asia. The REIT invests in the fast-growing retail outlet mall sector in China, and its portfolio consists of four retail outlet mall assets located in cities such as Chongqing, Kunming, and Hefei, with a total net lettable area of 306,709 square metres.

In April 2019, Sasseur announced its first acquisition by acquiring additional shop units at the annex block of its Hefei site for S$19.8 million. The acquisition will be fully funded by existing cash and will raise Sasseur’s ownership of the Hefei mall outlet from 77.8% to 82.1% by gross floor area. This acquisition will contribute to distribution income for Q2 2019. At Sasseur’s last traded price of S$0.80, annualised distribution yield based on Q1 2019 DPU is 8.3%.

3. Manulife US REIT

Manulife US REIT (SGX: BTOU) is the first pure-play US office REIT listed in Asia. Its portfolio comprises seven prime, freehold Class A quality office properties located in key cities within the US. The portfolio is valued at US$1.8 billion as of 31 March 2019, and it has a total net lettable area of 3.7 million square feet and an occupancy rate of 97.4%.

In its Q1 2019 earnings report, Manulife reported an adjusted DPU of 1.51 US cents, which was 0.7% higher than the DPU of 1.50 US cents in the same quarter last year. Annualised distribution yield at the last traded price of US$0.90 is 6.7%. Shortly after its earnings report was released, Manulife announced the acquisition of Centerpointe I and II for US$122 million. The property is a grade A office building located in Virginia, US. It has a high occupancy of 98.7%, and the great news is that it is accretive to DPU by 3.3%.

Exposure to overseas growth markets

All three REITs offer investors a pure-play option to gain entry into overseas markets, namely India, China, and the US. Investors should also note that all three REITs are in acquisition mode and are expanding their portfolio with accretive acquisitions or development projects. This makes them attractive investments to consider, though investors should also remain aware of the risks associated with each country.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of Manulife US REIT. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.

Motley Fool Singapore 2019