Looking to Beat Inflation? 5 Singapore REITs with Distribution Yields Exceeding 5%
Inflation has been a persistent bugbear for investors over the past year.
Core inflation was reported to have eased to 4.7% in May, down from the high of 5.5% earlier this year.
However, for the whole of 2023, the authorities project that core inflation will average between 3.5% to 4.5%.
Knowing this, you will naturally try to scout around for investments that can help you to beat the inflation scourge.
REITs happen to be a great asset class that can not only deliver a steady stream of passive income in the form of distributions but also delivers a yield that is superior to the inflation rate.
Of course, it pays to be discerning when selecting REITs for your investment portfolio.
They should own quality assets, possess a long track record of paying out consistent distributions, and be anchored by a major sponsor.
Here are five Singapore REITs with yields higher than 5% that you can add to your buy watchlist.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 107 industrial and commercial properties worth around S$6.8 billion across Singapore, Australia, the Netherlands, Germany and the UK.
For the first half of fiscal 2023 (1H FY2023) ending 31 March 2023, revenue dipped by 11.7% year on year to S$208 million and adjusted net property income (NPI) fell by 13.4% year on year to S$155.9 million.
The reason for the fall was because of the divestment of Cross Street Exchange and the weakening of currencies such as the British Pound, Australian Dollar, and Euro against the Singapore dollar.
Distribution per unit (DPU) slid 8.6% year on year to S$0.0352.
The annualised DPU of S$0.0704 means that FLCT’s units offer a forward distribution yield of 5.5%.
The REIT has a strong sponsor in Frasers Property Limited (SGX: TQ5) which has total assets of S$40.2 billion as of 30 September 2022.
There is room for FLCT to grow its asset base and DPU as its aggregate leverage as of 1H FY2023 stood at just 27.8%, leaving it with a S$3.1 billion debt headroom for acquisitions.
The REIT has also hedged three-quarters of its borrowings on fixed rates, thus mitigating against the continued rise in interest rates.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a portfolio of 185 properties spread out across eight countries with total assets under management (AUM) of S$12.8 billion as of 31 March 2023.
MLT delivered a commendable set of earnings for its fiscal 2023 (FY2023) ending 31 March.
Revenue improved by 7.7% year on year to S$730.6 million while NPI rose 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 offer a trailing distribution yield of 5.3%.
The logistics REIT enjoyed a high occupancy of 97% and also reported a positive rental reversion of 3.1% for its latest quarter.
Investors can look forward to higher DPU in the current fiscal year after MLT announced a major acquisition of eight properties in Japan, South Korea, and Australia.
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.
Its AUM stood at S$24.2 billion as of 31 December 2022.
2022 saw revenue for CICT jump 10.5% year on year to S$1.4 billion while NPI rose 9.7% year on year to S$1 billion.
DPU inched up 1.7% year on year to S$0.1058, giving CICT’s units a trailing distribution yield of 5.3%.
CICT’s first quarter 2023 (1Q 2023) business update showed continued growth from acquisitions and higher gross rental income.
Revenue climbed 14.4% year on year to S$388.5 million while NPI rose 11.3% year on year to S$276.3 million.
Keppel REIT (SGX: K71U)
Keppel REIT owns prime commercial assets in Singapore, Australia, South Korea, and Japan with an AUM of over S$9 billion.
A DPU of S$0.0592 was paid out for 2022 which included an anniversary distribution to unitholders.
Units of Keppel REIT yield 6.5%.
2022 saw Keppel REIT report a stable performance with property income inching up 1.2% year on year to S$219.3 million.
Fast forward to 1Q 2023 and property income has continued to rise, shooting up 5.9% year on year to S$57.7 million.
However, distributable income before the anniversary distribution came in 6.7% lower year on year at S$50.2 million.
The commercial REIT’s aggregate leverage remains fair at 38.7% as of 31 March 2023 along with a low all-in interest rate of 2.86%, allowing some room for the REIT to gear up for further acquisitions.
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 park properties.
Total AUM stood at S$5.2 billion as of 31 December 2022.
2022 saw CLCT’s DPU fall from S$0.0873 to S$0.075 as DPU was impacted by higher rental reliefs and interest expense as well as downtime for asset enhancement initiatives (AEIs).
Units of CLCT offer a trailing distribution yield of 7.2%.
1Q 2023 saw an improved business environment but gross revenue still dipped by 2.9% year on year while NPI slid by 1.6% year on year.
The REIT has restarted its AEIs and should benefit from China’s reopening earlier this year and the ramp-up of consumer spending.
It has also successfully refinanced all its borrowings and has no refinancing requirements for the remainder of the year.
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.
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Disclosure: Royston Yang owns shares of Frasers Logistics & Commercial Trust.
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