Which Singapore REITs Offer The Best Returns in 2018? (A Comparison Table)
Singapore economy grew by 3.6% in 2017. Economists have since raised their forecasts buoyed by robust growth in various sectors of the economy. Gross Domestic product is now expected to grow by 3.2%, up from an initial estimate of 3% growth.
The real estate sector is one of the sectors that continued to outperform thanks to an increase in disposable income. As the economy grew, so did investors generate significant returns especially those who bet on the country’s property market.
Real estate investment Trusts were some of the best performing asset class, given the amount of returns that investors walked away with. As the Straits index ticked higher by 18.1%, REITs also outperformed a good and in the process produced a respectable average income of about 18%.
Singapore being one of the largest REIT Markets in the world continues to experience an upsurge in demand for REITs as investors look for ways to bet on the booming real estate sector. This asset class is becoming extremely popular given the amount of returns it accords investors in the form of passive income.
What makes REITs exciting as investment vehicles, is the fact that they are obliged to distribute at least 90% of their taxable income. Over the past five years, Singapore REITs have returned close to 11.1% to investors, compared to 5.6% returned by the Straits Times Index.
Below are some of the most sought-after real estate investment trust in Singapore that investors are using to diversify their investment portfolio and in the process, generate significant returns.
Most Popular REITS In Singapore Comparison
|REITS||Debt/equity Ratio||1-YEAR Revenue Growth||3-year revenue Growth||P/E Ratio||Dividend Yield|
|Parkway Life REIT||56.68%||3.68%||4.07%||16.64||4.75%|
|AIMS AMP Capital Industrial REIT||47.66%||1.57%||3%||86.43||7.6%|
|Mapletree Logistics Trust||56.5%||7.05%||6.25%||15.22%||6.13%|
|BHG Retail REIT||41.59%||–||–||7.472||7%|
|OUE Commercial REIT||66.6%||19.18%||21.28||6.3%|
SolidBuild Business Space REIT
SolidBuild Business Space REIT was one of the best performing REITs in 2017, thanks to its principal investment strategy of investing in income-producing real estate properties. The REIT primarily invests in business and industry space properties. It owns a total of 12 business parks and industrial properties used by industries engaged in manufacturing, engineering, warehouse, and logistics.
The REIT boasts of a yield of 9.2%. In the third quarter of last year, its distribution per unit stood at 11.374 Singapore cents.
AIMS AMP Capital Industrial Trust
AIMS AMP Capital Industrial REIT seeks to provide investors a way of investing in a diverse range of real estate properties. The fund’s portfolio is made up of warehouse, manufacturing business park, high tech, and industrial properties.
It is considered one of the fastest growing industrial real estate investment trust given its secure and stable distributions. It also strives to provide investors long-term capital growth.
Its yield as of the end of 2017 stood at 7.6%, making it one of the highest paying REITs in the industry. Its year to date return stands at 15.3%
Mapletree Logistics Industrial Trust
Mapletree boasts of a diversified portfolio made up of properties in a number of countries. The real estate investment trust owns about 124 properties, distributed in Australia, Singapore, China and Hong Kong.
While listed in Singapore, the REIT generate a good chunk of its distribution income from overseas properties. The distribution goes a long way in protecting the REITs from unnecessary market swings from a given market. The biggest contributors to the REITs performance are properties located in Japan Hong Kong and Singapore.
Hong Kong is poised to remain a key market for the REIT given that Singapore market recovery is still slow, amidst oversupply pressures. Japan and Australia are also expected to continue providing stable income streams, given that properties in the two markets continue to enjoy 100% occupancy rates.
The REIT is fresh from reporting a 5% year-on-year increase in net property income that came in at S$159.6 million. Its distribution per unit has also registered a growth of 1.7% to 3.7774 cents.
Last year, the REIT delivered a total return of 38.8%. Its Dividend yield currently stands at 6%.
IREIT Global Group
IREIT Global is one of the few Singapore-listed REITs that invest in commercial properties in Europe. The real estate investment trust invests in office, retail and industrial real estate properties. Its portfolio currently consists of five key properties in Germany.
One of the things that make the REIT stand out compared to other REITs with big portfolios, is the fact that it has signed long leases with some of the biggest companies. The long leases provide assurance for future income. Only 16.6% of its leases are poised to expire between 2019 and 2021.
A high distribution yield is another aspect that makes the commercial property REIT highly desirable for income-focused investors. In the last three quarters of 2017, the REIT paid a total of 4.31 cents per share, leading to an annualized payout of 5.7 Singapore cents.
Its dividend yield currently stands at 8.3%
Cache Logistics Trust REIT
A dividend yield of 8.95% from Cache Logistics Trust should excite any investor looking for a reliable stream of passive income. The fund casts itself as a quality income-producing industrial real estate trust. Its portfolio consists of 19 high-quality logistics warehouse properties, located in Singapore, Australia, and China.
The portfolio has a total gross floor area of 7.6 million square feet valued at S$1.2 billion. The REIT is set to acquire nine logistics properties in Australia for S$188.3 million as it seeks to further strengthen its property portfolio. The acquisition will double the REITs assets under management in Australia.
The acquisition should also strengthen the REITs distribution income, which was up by 2.5% in the fourth quarter, to S$17.1 million.
BHG Retail REIT
BHG Retail is another popular real estate investment trust with a property portfolio made up of prime shopping malls in urban cities in China. The REIT manager strives to provide unit holders an attractive rate of return on investments, through stable and regular distributions.
Over the years, the REIT has achieved growth in distribution per unit and net asset value while maintaining an appropriate capital structure. The REITs portfolio consists of five retail properties located in areas concentered by middle and upper-middle income families.
The REIT manager controls 156,033 square meters of Net Let-able area valued at about S$810 million. Occupancy rate in the properties under management currently stands at 97.6%
With a market capitalization of S$365 million, BHG Retail REIT generated a total return of 16.5% last year, close to benchmark Straits Times Index 18.6% return.
The REIT boasts of an annualized dividend payout of 7%.
OUE Hospitality Trust REIT
OUE Hospitality Trust is another popular real estate investment trust that invests in a portfolio of income-producing real estate properties used for hospitality purposes. The REIT manager invests in hotels, serviced residences, resorts, and other lodging facilities.
One of its most priced property is the 563 room Crowne Plaza hotel that is managed by the Intercontinental Hotels Group. Its other property includes Mandarin Orchard Hotel in Singapore as well as high-end retail mall mandarin Gallery.
In the first nine months of last year, the REIT saw its net property income increase by 7.3% to $83.5 million, resulting in a 19.1% increase in distribution income. The REIT expects a further increase in net distribution income this year, given the expected 4% year-on-year increase in visitors into the country.
The REIT currently boasts a dividend yield of 6.3%.
Sabana Shariah Compliant REIT
Sabana Shariah Complaint REIT is in a league of its own as it is the world first real estate investment trust that operates by Sharia Laws. Given that, the REIT is designed to target investors in the GCC states, means it cannot derive more than 5% of its gross revenues from leases and tenants engaging in non-permissible activities.
Despite having limitations in the way it generates revenues for disposable income, the REIT continues to outperform a number of REITs in the industry.
Sabana REIT portfolio consists of 20 quality industrial buildings located entirely in Singapore. Its property portfolio is mostly made up of high tech industrial properties, chemical warehouse, and logistics facilities as well as general industrial facilities.
A yield of 7.9% all but affirms its credentials as one of the most popular investment vehicles in the industry and a source of reliable income.
SPH REIT was established with the aim of investing directly or indirectly in a portfolio of income-producing real estate properties used for retail purposes. Its portfolio is made of up of 910,395 square feet of Net Lettable area valued at about S$2.278 billion.
The REIT owns the Paragon and the Clementi Mall which enjoy occupancy rate of 100%. Some of the REIT’s largest tenants include Burberry Distribution Company, club 21 Pte, and Cold Storage Singapore.
What makes this REIT stand out compared to other REITs in Singapore is the fact that it has a low gearing level. Gearing Level refers to a company’s debt, relative to its equity. A low score, in this case, guarantees more stability when it comes to distribution as fewer distributions go into the repayments of debts.
SPH REIT remains well positioned to carry out acquisitions in future to further strengthen its disposable income stream, given the strength of its balance sheet that is void of too much debt.
A dividend yield of 5.6% backed by 100% occupancy rate in mall property portfolio should excite any investor looking to bet on commercial properties.
Ascendas is the largest real estate investment trust dealing with business and industrial space. As of the end of 2017, the REIT owned a total of 101 properties in Singapore and 31 properties in Australia. Unlike other REITs, it has more than 1,350 tenants which means it does not depend on one particular tenant for rental income.
No single tenant accounts for more than 5% of the REIT’s gross monthly revenue. However, ten of the REIT largest tenants account for 20.6% of the total gross rental income. Singapore Telecommunications is one of the REITs largest tenants
Ascendas has tenants from more than 20 industries which means its rental income stream is highly diversified. The diversification limits the chances of the REIT finding itself in a financial meltdown in case one or more sectors of a country’s economy underperform.
Ascendas REIT also boasts of a track record of rewarding investors through distributions. The trust pays a trailing distribution of S$0.1593 which amounts to a distribution yield of 6.73%.
Parkway Life REIT
Parkway Life REIT is one of Asia’s largest healthcare REITs. The REIT manager invests in real estate properties used for healthcare purposes. As of February, the trust property portfolio was made up of 50 properties valued at about S$1.75 billion.
The REIT owns three private hospital properties in Singapore in addition to stakes in 45 healthcare related facilities in Japan. For the fourth quarter of last year, the trust reported gross revenue of S$27.5 million, representing a 0.7% year-over-year increase. Net distributable income to unit holders increased by 3.3% to 19.1 million.
In a bid to mitigate against the risks of rising interest rates, the healthcare REIT has announced the pricing of JPY3.5 billion unsecured notes due in 2024.
The trust boast of an annual dividend yield of 4.8%.
Lippo Malls Indonesia Retail Trust
Lippo Malls Indonesia Retail Trust is one of the most popular real estate investment trust given its high dividend yield of 7.91%. In addition, it is the only trust listed in Singapore that focuses on retail malls in Indonesia. Its portfolio is made up of 23 retail malls and seven retail spaces across Indonesia.
Lipo Malls reported 1.2% increase in revenue in the recent quarter that came in at S$49.3millon, as net property income notched up 0.8% to S$49.3 million.
The mall focused real test investment trust boasts of a dividend yield of 8.2%
Read our other interesting articles: