Yahoo Finance 4 Singapore REITs I Plan to Buy with S$20,000
It is useful to always keep a little spare cash in your kitty.
You never know when you may be presented with attractive investment opportunities that you can immediately pounce on.
As an income investor at heart, I look for stocks that can pay me consistent and reliable dividends.
REITs are an asset class that is perfect for this purpose as they are mandated to pay out at least 90% of their earnings as distributions to enjoy tax benefits.
Lately, however, REITs have been under pressure because of high inflation and surging interest rates.
Despite these challenges, several REITs can weather this storm and still grow their distribution per unit (DPU).
If I had S$20,000, here are four Singapore REITs that I will park my money in.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns 10 retail suburban malls and one office property with assets under management (AUM) of S$6.9 billion as of 31 March 2023.
The REIT’s suburban malls will remain resilient during economic downturns as they cater to heartland residents who shop there for food and beverage as well as essential items.
For its fiscal 2023’s first half (1H FY2023), FCT reported a 6.5% year on year rise in gross revenue to S$187.6 million.
Net property income (NPI) improved by 5.7% year on year to S$138 million.
The REIT’s DPU remained flat year on year at S$0.0613.
Year-to-date, FCT saw a positive rental reversion of 4.3% with retail occupancy hitting a high of 99.2%.
There is room for DPU to grow further.
The retail REIT’s asset enhancement initiative (AEI) at Tampines 1 has shown strong leasing traction and achieved more than 90% pre-commitment before the commencement of works.
This AEI is slated for completion in the third quarter of 2024.
Meanwhile, FCT also acquired an additional 10% interest in Waterway Point last September and a 25% interest in NEX Mall in February this year.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across nine countries.
Its AUM stood at S$3.7 billion as of 31 March 2023.
Data centre demand should remain strong, driven by long-term trends such as digitalisation and the adoption of cloud computing, artificial intelligence, and machine learning.
For the first quarter of 2023 (1Q 2023), Keppel DC REIT’s revenue rose 6.5% year on year to S$70.4 million while NPI increased by 6.3% year on year to S$63.9 million.
DPU inched up 3% year on year to S$0.02541.
The data centre REIT maintained a high occupancy of 98.5% as of 31 March 2023 with more than half its portfolio tenancy agreements having built-in income and rental escalations based on the inflation rate.
The REIT also has a potential pipeline of more than S$2 billion in data centres for acquisition from its sponsor, Keppel Corporation Limited (SGX: BN4).
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with 21 properties in Singapore, two in Germany, and three in Australia.
The REIT’s AUM stood at S$24.2 billion as of 31 December 2022.
CICT reported a commendable performance for 1Q 2023 with gross revenue rising 14.4% year on year to S$388.5 million.
NPI increased by 11.3% year on year to S$276.3 million.
Portfolio occupancy stood high at 96.2% as of 31 March 2023.
CICT’s retail division has seen a positive rental reversion of 6% year-to-date while its Singapore commercial segment saw a positive reversion of 4.2% along with a 94.5% tenant retention rate.
The REIT manager intends to complete the ongoing AEI at CQ @ Clarke Quay and upgrade the lifts at 66 Goulburn Street in Australia.
CICT will also work on driving higher occupancy and renewing leases at optimal rates while managing costs by exploring renewable energy options.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, has a portfolio of 85 properties in Singapore and 56 in the US with an AUM of S$8.8 billion as of 31 March 2023.
The industrial REIT reported a mixed set of earnings for fiscal 2023 (FY2023) ending 31 March.
Revenue rose 12.3% year on year to S$684.9 million with NPI improving by 9.7% year on year to S$518 million.
DPU, however, slipped by 1.7% year on year to S$0.1357 because of higher operating expenses and finance costs.
MIT has reported several business development initiatives that could see its DPU head higher.
It completed the redevelopment of the Kolam Ayer Cluster into Mapletree Hi-Tech Park @ Kallang Way.
In doing so, the properties’ gross floor area has jumped from 506,720 square feet to 865,600 square feet.
As of 31 March, MIT had secured committed occupancy of 44.1%.
The REIT has also pulled off its first acquisition in two years – that of a Japanese data centre in Osaka.
MIT will acquire a 98.47% stake for S$500.1 million that is expected to add 2.1% to its DPU for FY2023 to S$0.1385.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Mapletree Industrial Trust.
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