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4 Singapore Retail REITs Sporting Distribution Yields of 5.5% or Higher

Lendlease - 313Somerset
Lendlease - 313Somerset

Retail REITs can count as one of the more resilient REIT sub-types even as the sector is buffeted by the headwinds of high interest rates and inflation.

Anchored by steady consumer demand, these mall-owning REITs can count on a steady flow of visitors who spend on necessities at shops within the malls.

Although retail REITs were hit badly during the pandemic, most have rebounded strongly when borders reopened.

Here are four Singapore-listed retail REITs with distribution yields of 5.5% or more that income investors may wish to place on their buy watchlist.

Frasers Centrepoint Trust (SGX: J69U)

Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building.

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Its assets under management (AUM) stood at around S$7.1 billion as of 31 March 2024.

For the first half of fiscal 2024 (1H FY2024), gross revenue dipped by 7.2% year on year to S$172.2 million.

Net property income (NPI) fell by 8.4% year on year to S$124.6 million.

The main reason for the drop was because of the divestment of Changi City Point back in October 2023 along with asset enhancement works going on at Tampines 1 Mall.

Excluding these effects, FCT’s revenue and NPI would have increased by 2.9% and 2.1% year on year, respectively.

The distribution per unit (DPU) fell less sharply, slipping by just 1.8% year on year to S$0.06022 for 1H FY2024.

The retail REIT’s trailing 12-month DPU came in at S$0.12042, giving its units a trailing 12-month distribution yield of 5.5%.

FCT’s committed occupancy stood at 99.9% with the REIT enjoying a positive rental reversion of 7.5% for 1H FY2024.

Both tenant sales and shopper traffic also saw increases of 4.3% and 8.1% year on year for the second quarter of fiscal 2024.

Aggregate leverage stood at 38.5%, allowing the REIT to tap further on debt for more yield-accretive acquisitions such as the purchase of an additional stake in NEX Mall recently.

Lendlease Global Commercial REIT (SGX: JYEU)

Lendlease Global Commercial REIT, or LREIT, owns a portfolio of retail and commercial properties in Singapore and Milan, Italy.

Its portfolio comprises Jem (office and retail), 313 @ Somerset (prime retail), and an interest in Sky Complex (Grade A office buildings) along with a 10% stake in Parkway Parade (suburban retail mall).

LREIT’s AUM stood at approximately S$3.65 billion as of 30 June 2023.

For 1H FY2024 ending 31 December 2023, LREIT’s gross revenue improved by 17.9% year on year to S$119.9 million on the back of better performance from its retail malls and supplementary rent from restructured leases for Sky Italia.

NPI jumped by 22.2% year on year to S$93.4 million.

However, DPU fell by 14.5% year on year to S$0.021 because of higher finance costs.

LREIT’s trailing 12-month DPU stood at S$0.0435, giving its units a trailing distribution yield of 7.8%.

During the REIT’s 3Q FY2024 business update, portfolio committed occupancy came in at 88.8% with tenant sales improving by 2.6% year on year.

The retail division also saw a positive rental reversion of 15.3% with the tenant retention rate for the portfolio staying healthy at 86.2% by net lettable area (NLA).

United Hampshire US REIT (SGX: ODBU)

United Hampshire US REIT, or UHREIT, owns a portfolio of 20 predominantly grocery and necessity-based properties along with two self-storage properties.

The REIT’s AUM stood at around US$763.4 million as of 31 December 2023.

2023 saw a mixed performance by the REIT.

Gross revenue increased by 7.1% year on year to US$72.2 million with new leases signed and rental escalation from existing leases.

NPI improved by 7.6% year on year to US$50.6 million but DPU came in at US$0.0479, lower than the prior year’s US$0.0588.

UHREIT’s units sported a trailing distribution yield of 11.8%.

For the first quarter of 2024 (1Q 2024), gross revenue inched up 2.3% year on year but NPI dipped by 1.3% year on year because of the divestment of Big Pine Center.

Distributable income for the quarter fell by 19% year on year to US$6.4 million.

UHREIT reported a high occupancy of 95.7% as of 31 March 2024 along with a high tenant retention rate of 92%.

Its next loan refinancing will be due only in November 2026, thus protecting the REIT from sharp increases in finance expenses.

Sasseur REIT (SGX: CRPU)

Sasseur REIT is an outlet retail mall REIT with four outlet mall assets in Chongqing, Kunming, and Hefei in China.

2023 saw the REIT report a 10.7% year-on-year rise in rental income to RMB 658.5 million.

DPU, however, fell by 4.6% year on year to S$0.06249 because of exchange losses and the REIT manager retained some of the distributable income.

Sasseur REIT’s trailing distribution yield stood at 9.3%.

For 1Q 2024, the REIT’s outlet sales dipped by 2.6% year on year because of the high base effect in 1Q 2023 when China’s economy had just reopened.

As a result, rental income fell marginally by 1.4% year on year to S$32.6 million, mainly because of the depreciation of the RMB against the Singapore Dollar.

Sasseur REIT also changed its distribution frequency from quarterly to half-yearly to save on compliance and administrative costs.

Portfolio occupancy set another record at 97.9% with the REIT having one of the lowest gearing ratios among Singapore REITs at 25.2%.

In our latest report, we dive into five standout Singapore REITs offering distribution yields exceeding 5.5%. Why settle for less? Get more dividends hitting your bank account with our REITs guide. Click here to download for free now.

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

The post 4 Singapore Retail REITs Sporting Distribution Yields of 5.5% or Higher appeared first on The Smart Investor.