Hello fellow investors, Real Estate Investment Trusts (REITs) have historically been a consistent passive income generator with possible capital growth. In recent times, REITs have faced heavy pressure from rising interest rates due to rate hikes, cutting into their returns due to higher loan interest rates.
This has led to an exodus of dividend-sensitive investors, causing REITs to become unloved and beaten down. For value investors out there, this presents an opportunity for bargains on great REITs that are undervalued.
In this article, let’s jump into five great Singapore REITs to consider adding to your portfolio.
- CapitaLand India Trust (CY6U)
- Sasseur REIT (CRPU)
- Mapletree Industrial Trust (ME8U)
- Keppel DC REIT (AJBU)
- CapitaLand Ascendas REIT (A17U)
CapitaLand India Trust (CY6U)
With a total completed floor space of 19.2 million square feet distributed across Bangalore, Chennai, Hyderabad, Pune, and Mumbai, CLINT’s portfolio includes 9 top-tier IT business parks, one logistics park, one industrial complex, and four data center developments in India.
What’s Good?
With a high distribution and property yield of over 7% while trading at a relatively low valuation of 1.05 PB, CLINT is trading at a fair price. With a low debt ratio of 37% and high occupancy rate of 94%, it has room to borrow more for growth. If you are looking for exposure to the Indian real estate market, now would be a good time to do so.
| Distribution Yield | 7.00% |
| Price to Book (PB) Ratio | 1.05 |
| Property Yield | 7.79% |
| Gearing Ratio | 37% |
Sasseur REIT (CRPU)
The first outlet REIT listed in Asia back in 2018, it currently owns 4 outlets in China. These properties are located in Chongqing, Hefei, and Kunming respectively.
What’s Good?
The latest financial report stated that sales has exceeded pre-Covid levels, and occupancy rates have reached an all time high of 97.2%. Unfortunately, due to unfavorable forex rates and weaker Yuan, dividend income is suppressed for their latest distribution. Nonetheless, distribution yield still stands at a very nice 9.42%, while property yield achieved 7.68%. Sasseur REIT has a very healthy gearing ratio of only 27.60%, and is undervalued currently at 0.80 Price to Book.
If investors can stomach the current concerns over China’s economy and deflation risks, Sasseur REIT is a good pure play China retail REIT to invest in.
| Distribution Yield (%) | 9.42% |
| Price-to-Book (PB) Ratio | 0.80 |
| Property Yield (%) | 7.68% |
| Gearing Ratio (%) | 27.60% |
Mapletree Industrial Trust (ME8U)
MIT’s total assets under management totaled S$8.8 billion and included 56 properties in North America (including 13 data centers controlled through a joint venture with Mapletree Investments Pte Ltd) and 85 properties in Singapore. Data Centers, Hi-Tech Buildings, Business Park Buildings, Flatted Factories, Stack-up/Ramp-up Buildings, and Light Industrial Buildings are all included in MIT’s property portfolio.
What’s Good?
With 141 properties across 6 property segments in Singapore and North America, Mapletree Industrial is a well diversified REIT. In its latest report, MIT reported 93.3 overall portfolio occupancy rate and a 3.9 yr WALE. With a property yield of 7.09%, healthy and diversified tenant base and solid financials, this REIT is a good investment, albeit being slightly overpriced at 1.24 PB.
| Distribution Yield (%) | 5.93% |
| Price to Book (PB) Ratio | 1.24 |
| Property Yield (%) | 7.09% |
| Gearing Ratio (%) | 37.40% |
Keppel DC REIT (AJBU)
The first data center real estate investment trust to be listed in Asia, Keppel DC REIT has $3.7b asset under management. These assets comprises 23 data centres across 9 countries.
What’s Good?
With the proliferation of AI and constant need for data and connectivity, the demand for data centres will only increase. In their latest report, occupancy rate achieved 98.5%, and WALE is reported as 8 yr. With a long lease expiry and high property yield, and low gearing ratio, Keppel DC REIT is a fantastic investment.
The only catch is the price of the stock, which is overpriced at 1.54 PB. Historically however, Keppel DC REIT has never fallen below 1, with a 10 year low of 1.06. Investors need to weigh the long term returns for holding an overpriced stock, even if it is a good business.
| Distribution Yield (%) | 4.73% |
| Price to Book (PB) Ratio | 1.54 |
| Property Yield (%) | 6.94% |
| Gearing Ratio (%) | 36.40% |
CapitaLand Ascendas REIT (A17U)
The first and largest industrial and commercial Real Estate Investment Trust (REIT) in Singapore is CapitaLand Ascendas REIT (CLAR), originally Ascendas Real Estate Investment Trust. It is a multi-national REIT specializing in tech and logistics properties in developed markets.
What’s Good?
In the Manager’s latest report, occupancy rate has increased to 94.4%, with a 14.2% positive rental reversion. WALE is 3.9 years, while property yield stands at 5.81%. All these points to a financially healthy REIT. For a long term investment, CapitaLand Ascendas REIT provides diversity and stable dividends.
| Distribution Yield (%) | 5.77% |
| Price to Book (PB) Ratio | 1.16 |
| Property Yield (%) | 5.81% |
| Gearing Ratio (%) | 36.30% |
Conclusion
I hope this article gives you some inspiration and perspective on REITs as an investment vehicle for passive income. Please do your due diligence and research before investing in any products. Till next time, invest smartly and trade safely.
Budget Crunch 