4 Singapore REITs Sporting Attractive Distribution Yields of 5.4% or More

Forklift in Warehouse
Forklift in Warehouse

In the quest for yield, the REIT asset class often pops up as an investor’s favourite.

REITs are mandated to pay out at least 90% of their earnings as distributions to enjoy tax benefits.

Because of this, income investors rely on REITs to generate a steady stream of predictable, passive income.

With Singapore’s core inflation running at 3.8% in July and full-year inflation forecast to end between 3.5% to 4.5%, it is imperative that you park your money in inflation-beating stocks.

We shine the spotlight on four REITs that sport distribution yields of 5.4% or more.

These REITs could fit snugly in your investment portfolio or be added to your buy watchlist.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 193 properties across eight countries with assets under management (AUM) of S$13.5 billion as of 30 June 2023.

For its fiscal 2024’s first quarter (1Q FY2024) ending 30 June 2023, MLT saw gross revenue dip by 2.9% year on year to S$182.2 million.

Net property income (NPI) slid by 3.1% year on year to S$158.1 million.

The REIT’s distribution per unit (DPU), however, inched up 0.1% year on year to S$0.02271.

MLT’s trailing 12-month (TTM) DPU stood at S$0.09014, giving its units a trailing distribution yield of 5.4%.

The logistics REIT also reported strong portfolio metrics.

Portfolio occupancy came in at 97.1% with an average positive rental reversion of 4.2% for the quarter.

The REIT had just concluded a major acquisition of eight properties in Japan, South Korea, and Australia for S$904.4 million.

Its aggregate leverage stood at 39.5% with a low cost of debt of 2.5%.

The REIT manager is also undertaking capital recycling by divesting two properties in Malaysia in July this year along with a redevelopment project in Benoi Road in Singapore.

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.

Total AUM stood at S$24.2 billion as of 31 December 2022.

CICT reported an encouraging set of financial numbers for its fiscal 2023’s first half.

Gross revenue increased by 12.7% year on year to S$774.8 million while NPI improved by 10.1% year on year to S$552.3 million.

DPU for 1H 2023 increased from S$0.0522 to S$0.053.

TTM DPU came in at S$0.1066, giving CICT’s units a trailing 12-month distribution yield of 5.6%.

CICT’s portfolio turned in a resilient performance even with inflation and interest rate headwinds.

For 1H 2023, the REIT’s retail portfolio achieved a positive rental reversion of 6.9% while its office portfolio saw a positive reversion of 9.6%.

In the same period, the retail portfolio also enjoyed a 6% year on year increase in retail sales and a 17.5% year on year jump in shopper traffic.

Portfolio occupancy stood healthy at 96.7% as of 30 June 2023.

Lendlease Global Commercial REIT (SGX: JYEU)

Lendlease Global Commercial REIT, or LREIT, is also a retail and office REIT with 313 Somerset and Jem in its Singapore portfolio along with a freehold interest in Sky Complex in Milan, Italy.

These properties have an appraised value of S$3.65 billion as of 30 June 2023.

LREIT reported a mixed financial performance for its fiscal 2023 (FY2023) ending 30 June.

Gross revenue and NPI more than doubled year on year to S$204.9 million and S$153.9 million, respectively, due to the full-year contribution from the acquisition of Jem Mall along with rental growth.

DPU for FY2023, however, slipped by 3.2% year on year to S$0.047 because of higher borrowing costs.

Units of LREIT sport a TTM distribution yield of 8.7%.

There is good news for investors, though, as the REIT reported positive rental reversions for both its retail (+4.8%) and office (+5.9%) portfolios.

The REIT also enjoyed a high tenant retention rate of 82.4% and has no refinancing risks for FY2024.

LREIT’s gearing stood at 40.6% with 61% of its loans hedged to fixed rates.

StarHill Global REIT (SGX: P40U)

StarHill Global REIT, or SGR, is a retail and office REIT with a portfolio of nine properties in Singapore, Australia, Malaysia, Japan, and China valued at around S$2.8 billion as of 30 June 2023.

For FY2023, gross revenue edged up 0.7% year on year to S$187.8 million while NPI improved by 2.2% year on year to S$147.8 million.

DPU stayed flat year on year at S$0.038, giving SGR’s units a TTM distribution yield of 7.8%.

The REIT achieved a high committed occupancy of 97.7% as of 30 June 2023.

Gearing remained fair at 36.7% and the REIT has no refinancing commitment until September 2024.

Around 84% of its total debt is hedged to fixed interest rates.

Both tenant sales and shopper traffic improved by 4.5% and 17% year on year, respectively, for the second half of FY2023.

Is it a good time to buy into Singapore REITs? If you’ve thought about it, then our latest REITs guide will be an essential read. This exclusive pdf report shows you why REITs are still excellent assets, what sectors to look out for and how to find good REITs today. The info inside can help you build a solid retirement portfolio. Click here to download it for FREE.

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

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