With the Federal Reserve announcing another 0.25% of interest rate hikes during the FOMC yesterday, the Fed funds rate is now at 4.75% – 5.0% (which is the highest since October 2007 – and we know what happened then, with financial crisis eventually breaking out.)

Will history repeat itself this time round? Your guess is as good as mine.

That said, it becomes all the more important for you to invest in fundamentally sound companies – no doubt IF a financial crisis happens, the share prices of all companies will plunge, but when the economy gradually recovers, the prices of these fundamentally sound companies will be among the first to see their share prices shoot up.

In this post, I’ll be sharing with you 7 fundamentally sound REITs with a distribution payout of 5.0% and above (based on their closing prices yesterday [22 March 2023], along with the REIT’s latest full year distribution payout) – no doubt at 5.0%, it is still unable to beat the current inflation rate in Singapore (at 6.3% in February 2023 announced today, source here) but it beats leaving your money in the bank, where the interest is miserable (I’m not talking about Multiplier accounts here.) Also, at a distribution yield of at least 5.0%, it beats the interest rate of 4.0% in the CPF Special Account:

1. CapitaLand Ascendas REIT (SGX:A17U)

CapitaLand Ascendas REIT (previously known as just Ascendas REIT) is Singapore’s first and largest listed business space and industrial REIT. Currently, it has 227 properties across 3 segments: Business Space and Life Sciences, Logistics, and Data Centres in developed markets of Singapore, the United States, Australia, and in the United Kingdom/Europe.

In the last 5 years (between FY2018 and FY2022 – the REIT has a financial year end every 31 December), its gross revenue and net property income have saw a steady growth – with the former growing from $886.2m in FY2018 to $1,352.7m in FY2022, and the latter growing from $485.7m in FY2018 to $663.9m in FY2022.

As at 31 December 2022, the REIT has a portfolio occupancy of 94.6%, and its debt profile is also healthy with its aggregate leverage at 36.3% (a good distance away from the regulatory level of 50.0%.)

Finally, based on its closing price of $2.81 yesterday, and a distribution payout of 15.795 cents/unit in FY2022, it represents a distribution yield of 5.6%.

2. CapitaLand Integrated Commercial Trust (SGX:C38U)

CapitaLand Integrated Commercial Trust, or CICT for short, is the first and largest REIT listed in the Singapore Exchange. Its portfolio comprises of 21 properties (located in Singapore, Germany, and Australia) used for commercial (retail and/or office) purposes.

Over the last 5 years (between FY2018 and FY2022 – the REIT has a financial year end every 31 December), its gross revenue and net property income have also grown at a stable pace – with the former going up from $697.5m in FY2018 to $1,441.7m in FY2022, while the latter improved from $493.5m in FY2018 to $1,043.3m in FY2022.

As at 31 December 2022, the REIT’s occupancy rates for its retail, office, and integrated properties are all above 90% – at 98.3%, 94.4%, and 97.1% respectively. Also, its aggregate leverage, at 40.4%, remains healthy.

Finally, based on its closing price of $1.92 yesterday, and a distribution payout of 10.58 cents/unit in FY2022, it represents a distribution yield of 5.5%.

3. Frasers Centrepoint Trust (SGX:J69U)

Frasers Centrepoint Trust is a pure-play suburban REIT, with all of its properties (comprising of 9 retail malls, and 1 office building) located in the various heartland locations in Singapore. Among all the 7 REITs, this is the only REIT with all of its properties located in Singapore.

The REIT’s financial performance over the last 5 years (between FY2017/18 and FY2021/22 – it has a financial year end every 30 September) has remained stable – with its gross revenue growing from $193.3m in FY2017/18 to $356.9m in FY2021/22, and its net property income improving from $137.2m in FY2017/18 to $258.6m in FY2021/22.

Both its occupancy rate as well as its debt profile as at 31 December 2022 is at very healthy levels – with the former at 98.4%, and the latter at 33.9% (which is a very conservative level.)

Finally, based on its closing price of $2.22 yesterday, and a distribution payout of 12.27 cents/unit in FY2021/22, it represents a distribution yield of 5.5%.

4. Keppel DC REIT (SGX:AJBU)

Keppel DC REIT is Singapore’s first pure-play data centre REIT in Asia, with its portfolio comprising of 23 data centres across 9 countries (Singapore, Australia, China, Malaysia, Ireland, Germany, Netherlands, United Kingdom, and Italy.)

In the last 5 years (between FY2018 and FY2022 – the REIT has a financial year ending every 31 December), both its gross revenue and net property income saw stable growths – with the former improving from $175.5m in FY0218 to $277.3m in FY022, and the latter climbing from $157.7m in FY2018 to $252.5m in FY2022.

As at 31 December 2022, the REIT’s portfolio occupancy is at a resilient level of 98.5%, and aggregate leverage at 36.4% (at this level, there’s still a good headroom before the regulatory level of 50.0% is reached.)

Finally, based on its closing price of $2.05 yesterday, and a distribution payout of 10.214 cents/unit in FY2022, it represents a distribution yield of 5.0%.

5. Mapletree Pan Asia Commercial Trust (SGX:N2IU)

Formed as a result of a merger between Mapletree Commercial Trust (where all of its commercial properties are located in Singapore), and Mapletree Pan Asia Commercial Trust (where all of its commercial properties are located in key gateway markets of Asia) in August 2022, its portfolio currently comprises 18 properties located in a total of 5 countries – Singapore, Hong Kong, China, Japan, and South Korea.

Looking at the REIT’s financial performances over the last 5 years (between FY2017/18 and FY2021/22 – it has a financial year ending every 31 March; do take note that the REIT’s latest year’s financial performance was before the completion of the merger and hence contributions from the newly added properties from Mapletree North Asia Commercial Trust’s properties were not included), it has risen stably – with its gross revenue growing from $433.5m in FY2017/18 to $499.5m in FY2021/22, and its net property income going up from $338.8m in FY2017/18 to $388.7m in FY2021/22.

In terms of its portfolio occupancy, as well as its debt profile as at 31 December 2022, they are at very healthy levels – with the former at 95.5%, and the latter at 40.2% (which is still a good distance before the regulatory level of 50.0% is reached.)

Finally, based on its closing price of $1.77 yesterday, and a distribution payout of 9.53 cents/unit in FY2021/22, it represents a distribution yield of 5.4%.

6. Mapletree Industrial Trust (SGX:ME8U)

Mapletree Industrial Trust invests in properties used for industrial, as well as for data centre purposes. Its portfolio currently comprises 85 properties in Singapore, along with 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd.)

Over the last 5 years (between FY2017/18 and FY2021/22 – the REIT has a financial year ending every 31 March), both its gross revenue and net property income have grown at a stable pace – with the former improving from $363.2m in FY2017/18 to $610.1m in FY2021/22, and the latter climbing from $277.6m in FY2017/18 to $472.0m in FY2021/22.

Looking at the REIT’s portfolio occupancy and debt profile, as at 31 December 2022, its portfolio occupancy is at a very strong rate of 95.7%, and its aggregate leverage remains at a healthy level of 37.2%.

Finally, based on its closing price of $2.34 yesterday, and a distribution payout of 13.80 cents/unit in FY2021/22, it represents a distribution yield of 5.9%.

7. Mapletree Logistics Trust (SGX:M44U)

Mapletree Logistics Trust is the first Asia-focused logistics REIT listed on the Singapore Exchange. Its portfolio currently comprises of 186 properties located in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea, and Vietnam.

In terms of its financial performances over the last 5 years (between FY2017/18 and FY2021/22 – the REIT has a financial year ending every 31 March), both its gross revenue and net property income have grown at a steady pace – with the former improving from $395.2m in FY2017/18 to $678.6m in FY2021/22, and the latter going up from $333.8m in FY2017/18 to $592.1m in FY2021/22.

As at 31 December 2022, the REIT’s portfolio occupancy is at a high of 96.9%, and its aggregate leverage remains at a very healthy level of 37.4%.

Finally, based on its closing price of $1.69 yesterday, and a distribution payout of 8.787 cents/unit in FY2021/22, it represents a distribution yield of 5.2%.

Closing Thoughts

Looking at the 7 REITs above, I’m sure you can agree with me that they are fundamentally sound – with their financial performances over the last 5 years growing at a stable pace, portfolio occupancy at above 90%, and finally, a very healthy aggregate leverage (at 40.0% or below.)

Despite having said that, this post is by no means any recommendation for you to go out there and buy all 7 REITs. You should always do your own due diligence to first study about the individual REITs and make sure you understand them well enough prior to investing your hard-earned money into them – if you are new to REIT investing, not to worry, as you can check out this 5-part video series created in collaboration with The Joyful Investors titled ‘Ready to REITire’, where we will be showing you the essentials to get started. At the time of writing of this post, 2 parts have already been published, and you can check them out here – part 1 (introduction to S-REITs, why you should invest in them, and limitations), part 2 (3 things to look at to determine whether a REIT deserves a place in your ‘shopping list’.)

As always, I hope you’ve found this post useful, and if you have any questions, feel free to let me know here.

Disclaimer: At the time of writing, I am a unitholder of all 7 REITs above.

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