In 2002, the first real estate investment trust (REIT), CapitaMall Trust, was listed on the Singapore Exchange (SGX: S68) to much fanfare.
REITs were originally created to provide individual investors with a way to own a slice of high quality and income-generating properties with a relatively small capital requirement.
Today, the 42 REITs and property trusts listed on the SGX remain as popular as ever.
About 12% of Singapore’s total stock market capitalization is made up of REITs, much higher than other markets such as Japan (2%) and Hong Kong (0.4%).
For new investors who want to get in on the action, here are four established REITs to kickstart your investment journey.
Ascendas REIT (SG: A17U)
Ascendas REIT, or A-REIT, is Singapore’s largest industrial REIT and the seventh-largest component of the Straits Times Index (SGX: ^STI).
A-REIT’s property portfolio is worth S$16.0 billion as of 30 September 2021, comprising 207 properties across Singapore, Australia, the UK and the US.
Traditionally, the REIT’s biggest strength has been its diversification.
A-REIT has a customer base of 1,530 tenants from over 20 industries, with no single tenant contributing more than 3.5% to the REIT’s total monthly gross revenue.
In addition, the REIT has a strong track record of raising distributions before the COVID-19 pandemic struck, with distribution per unit (DPU) rising every year from 2010 to 2019.
Earlier in 2021, the REIT also diversified its portfolio further by adding data centres.
Data centres are a fast-growing asset class with burgeoning demand due to the proliferation of 5G and Internet of Things devices.
Ascendas REIT paid out a DPU of S$0.0766 for its fiscal 2021 first half, and currently offers a forward dividend yield of around 5%.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is Asia’s third-largest REIT and Singapore’s largest.
Formed in October 2020 after the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust, CICT’s portfolio consists of a mix of office and retail properties in Singapore and Germany.
Examples of malls managed by CICT are Funan, Plaza Singapura and JCube.
On the retail front, tenants’ sales per square foot have recovered to 86.3% of pre-pandemic figures, even though recovery in shopper footfall is still languishing at 61.3% of 2019 levels.
Despite the sluggish recovery, retail occupancy remains high at 97.0%, and CICT continues to refresh its tenant mix to attract shoppers back into its malls.
CICT’s office properties have also weathered the pandemic well.
Overall office occupancy stood at 93.0% as of 30 June 2021, and committed rental rates were higher than comparative sub-markets.
At current prices, CICT offers an annualized dividend yield of 4.9%.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT that manages an S$8.5 billion portfolio of 143 industrial properties across Singapore and North America.
MIT is a great choice for investors who prefer greater exposure to data centres.
The REIT’s recent acquisition of 29 data centres in the US bumped its data centre exposure up to 52.9% of MIT’s portfolio, much higher than Ascendas REIT’s data centre exposure of 9%.
MIT believes that data centre demand will continue to be driven by long term trends and plans to further increase the data centre proportion of its portfolio.
Income investors should also take note of MIT’s enviable track record of raising distributions.
The REIT has lifted DPU every single year since it was listed in 2010, including in 2020 when the pandemic was raging on.
In its recent report for the first half of fiscal year 2022 (ended 30 September 2021), MIT increased DPU by 14.2% year on year to S$0.0682, which translates to an annualised yield of 5%.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT is one of Asia’s largest healthcare REITs, managing a portfolio of three private hospitals in Singapore, 49 nursing homes in Japan, and one medical centre in Malaysia.
In total, the REIT has assets management of S$2 billion.
The three hospitals in Singapore are Gleneagles, Mount Elizabeth and Parkway East, and together, these properties contribute approximately 59.5% of the REIT’s total gross revenue.
Demand for healthcare in Singapore is expected to remain strong for the long term as the country grapples with an ageing population and remains a top destination for medical tourism.
Similarly, Japan is facing greying issues, with one in three Japanese expected to be over 65 years old by 2050.
Enter Parkway Life REIT’s nursing homes in Japan.
The high-quality properties are located in dense residential districts in major cities, and have upward-only rental escalation clauses built into most of the leases.
The REIT also has an amazing track record of raising distributions every year since it was listed in 2007.
Based on the latest quarter’s DPU of S$0.0357, annualized dividend yield stands at 3.1%.
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Disclosure: Herman Ng owns shares of Ascendas REIT, CapitaLand Integrated Commercial Trust and Mapletree Industrial Trust.