Yahoo Finance 4 Singapore REITs with Distribution Yields That Can Beat the CPF Interest Rate Hands Down
Singapore’s Central Provident Fund (CPF) system has proven reliable in helping to save up for retirement.
The news reported that a total of S$3.3 billion was withdrawn from members’ accounts in the first quarter of 2023 (1Q 2023), with the majority made by those over 55 years of age.
CPF Life, the annuity scheme administered by the CPF Board, took up the remainder of these withdrawals.
REITs are also effective in dishing out steady, dependable distributions to unitholders every three or six months.
This stream of passive income makes REITs an effective asset class for income-seeking investors.
The CPF Ordinary Account (OA) pays an interest rate of 2.5% on members’ balances.
Here are four Singapore REITs that provide a distribution yield that can easily surpass this CPF OA interest rate.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across nine countries.
The REIT’s assets under management (AUM) stood at S$3.7 billion as of 31 March 2023.
For 1Q 2023, the REIT’s gross revenue rose 6.5% year on year to S$70.4 million while net property income (NPI) increased by 6.3% year on year to S$63.9 million.
The data centre REIT’s distribution per unit (DPU) inched up 3% year on year to S$0.02541 for the quarter, taking the annualised DPU to S$0.10164.
Keppel DC REIT’s units yielded 4.7% at the last close of S$2.17.
The REIT maintained a high portfolio occupancy of 98.5% with more than half of its tenancy agreements having built-in rental escalation clauses that are pegged to the inflation rate.
Aggregate leverage stood at 36.8%, opening the REIT to acquisition opportunities to further boost its DPU.
The data centre market fundamentals remain strong, with demand set to be driven by trends such as cloud computing adoption and generative artificial intelligence.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, is a hospitality trust with an AUM of around S$3.1 billion as of 31 March 2023.
Its portfolio comprises 19 operational properties with 4,820 rooms and a retail mall as well as a build-to-rent property project with 352 apartment units.
For 2022, CLDHT saw a 45.4% year on year surge in revenue to S$229.4 million as countries reopened their borders and more people started travelling for vacations.
NPI jumped by 43.7% year on year to S$123.7 million and distribution per stapled security (DPSS) climbed 31.9% year on year to S$0.0563.
At a unit price of S$1.20, CLDHT’s units offer a trailing distribution yield of 4.7%.
For the hospitality trust’s latest 1Q 2023 business update, things have shown further improvement.
Total revenue climbed 31.5% year on year to S$60.8 million while NPI improved by 35% year on year to S$32.7 million.
For CDLHT’s Singapore hotels, the average occupancy also rose 13.5 percentage points from 54.5% to 67.9% for 1Q 2023.
Revenue per available room soared 86.1% year on year to S$176.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 185 properties across eight countries.
MLT’s AUM stood at S$12.8 billion as of 31 March 2023.
For the REIT’s fiscal 2023 (FY2023) ending 31 March, gross revenue rose 7.7% year on year to S$730.6 million with NPI increasing by 7.2% year on year to S$634.8 million.
DPU edged up 2.5% year on year to S$0.09011.
Units of MLT yield 5.5% at the last close of S$1.64.
Portfolio occupancy stayed high at 97% and the REIT’s aggregate leverage came in at 36.8%, giving it ample debt headroom for further acquisitions.
MLT has announced a set of acquisitions involving eight properties in Japan, Australia and South Korea worth S$904.4 million that will help to increase DPU.
The logistics REIT is also considering a potential acquisition of two assets in China worth S$209.6 million and is mulling over a potential divestment of an industrial warehouse in Hong Kong for approximately S$100.3 million.
CapitaLand China Trust (SGX: AU8U)
CapitaLand China Trust, or CLCT, is a China-focused REIT with 11 retail malls, five business parks, and four logistics parks within its portfolio.
These properties are in 12 cities within China with a total AUM of around S$5.2 billion as of 31 December 2022.
2022 saw the REIT’s gross revenue inch up 1.4% year on year to S$383.2 million with NPI creeping up 1.5% year on year to S$254.2 million.
However, DPU fell by 14.1% year on year to S$0.075 as rental relief was doled out to tenants during China’s COVID-19 lockdowns in 2022.
CLCT’s historical distribution yield stood at 7.5%.
1Q 2023 saw an improving business environment but gross revenue dipped by 2.9% year on year to RMB 475.5 million while NPI slipped by 1.6% year on year to RMB 339.1 million.
Despite this, the retail rental reversion was positive at 3.1% and new economy assets enjoyed a positive rental reversion of 1.6%.
The REIT manager also completed an asset enhancement initiative at CapitaMall Yuhuating in 1Q 2023 with contributions expected to flow through in the second quarter.
Not sure which REIT to put your money in? Use our 7-step REIT checklist to find one that fits into your retirement plan. Checklist is inside our latest FREE report “Singapore REITs Retirement Plan”. Click here to download it now.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of Keppel DC REIT.
The post <strong>4 Singapore REITs with Distribution Yields That Can Beat the CPF Interest Rate Hands Down</strong> appeared first on The Smart Investor.
