Here are 5 Singapore REITs you can own for a lifetime.
Fortunately, for Singapore investors, Singapore is a tax haven. Singapore does not tax capital gains or have any dividend withholding tax.
To understand more about dividend investing, you can check out our explanation. Learn To Invest: Dividend Investing.
Do you have any REITs you would like to buy and hold?
Today, we will be unpacking 5 Singapore REITs you can buy and hold forever.
1. Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, PLife REIT owns a resilient portfolio of 56 high-quality healthcare and aged care properties valued at S$2.29 billion.
With sound fundamentals, PLife REIT maintains a robust balance sheet. This provides them greater financial flexibility to explore compelling investment opportunities in line with its mission to deliver regular and stable returns for its unitholders.
While, PLife REIT looks really great at the moment, 1 thing we can’t bring ourselves to buy is because of its valuation – dividend yield does not seem very enticing to us.
On 14th November 2022, PLife REIT won The Edge Singapore Billion Dollar Club 2022 – Highest Returns To Shareholders. An astounding 17.2% CAGR growth in shareholders’ returns over the 3 years taken into consideration. Thus, this validated PLife REIT’s management of consistent and steady delivery of returns even amidst volatilities. Hence, this naturally places it amongst the best of S-REITS on the Singapore Exchange.
2. Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, FCT property portfolio comprises nine retail malls and an office building located in the suburban regions of Singapore. FCT is among the top-ten largest Singapore REITs by market capitalisation. It is also an index constituent of several benchmark indices including the FTSE EPRA/NAREIT Global Real Estate Index Series (Global Developed Index), FTSE ST Real Estate Investment Trust Index, MSCI Singapore Small Cap Index and the SGX iEdge S-REIT Leaders Index.
A slight decline in FY2020 for FCT, due to COVID lockdown. Many malls have little to no footfall which resulted in FCT not performing well.
With 9 quality suburban malls, FCT has assets under management of S$6.1 billion. Moreover, their committed occupancy is just shy of 100%, at 97.3%!
FCT looks really great at the moment, as we already have a position in FCT. We will probably wait for the price to be even more attractive before putting in another tranche in.
A company which possesses a stable portfolio occupancy level. It also has a healthy gearing and balance sheet. Lastly, FCT is also improving the tenant’s sales trend. Frasers Centrepoint Trust has been a reliable “Singapore-only” REIT that gives investors exposure to the consumer story in Singapore while also proving defensive given its exposure to suburban malls that Singaporeans frequent for daily necessities. Now, with the reopening of the local economy set to continue further, it should be one of the key REIT beneficiaries as dining in larger groups returns.
3. Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, MIT comprised 85 properties in Singapore and 56 properties in North America. This includes 13 data centers held through the joint venture with Mapletree Investments. As at 30 September 2022, MIT’s total assets under management was S$8.9 billion. MIT has an extensive property portfolio. This includes Data Centres, Hi-Tech Buildings, Business Park Holdings, Flatted Factories, Stack-up/Ramp-up Buildings and Light Industrial Buildings. MIT is managed by Mapletree Industrial Trust Management and sponsored by Mapletree Investments.
Fortunately, MIT was not affected by COVID. The recent 5 years result has been outstanding for Mapletree Industrial Trust as there are tailwinds in the emerging sectors – Data Centres. Especially for FY21/22, it was tremendous for all S-REITs, seeing the numbers many REITs achieved.
On 31st March 2022, MIT Assets Under Management (AUM) was S$8.8 billion. As at 31 March 2022, 57 properties in North America and 86 properties in Singapore accounted for about 50.7% and 49.3% of MIT’s assets under management respectively.
MIT’s remarkable financial performance in terms of year-on-year growth in gross revenues and net property income is a testament to the strong economic moat that it possesses in this industry. Having said that, investors should not expect the same DPU growth to be a frequent occurrence. In terms of valuation, MIT currently trades at a dividend yield of 5.0% (as of 1 August 2022).
4. Ascendas REIT (SGX: A17U)
Ascendas REIT, is Singapore’s first and largest listed business space and industrial REIT. It owns properties across three key segments, namely, 1) Business Space and Life Sciences, 2) Logistics, 3) Industrial and Data Centres. The properties are located in the developed markets of Singapore, Australia, the United STates and the United Kingdom/Eurpope.
Similarly to MIT, Ascendas REIT was not really affected by COVID. The recent 5 years result has also been extremely privileged for Ascendas REIT as there are tailwinds in the emerging sectors – Data Centres and Logistics. Moreover in FY21, Ascendas managed to increase 20 properties with acquisition of 11 last mile logistics properties in Kansas City, United States for S$207.8 million.
As of today, Ascendas REIT has 228 properties across 4 developed markets. They have Assets Under Management (AUM) of ~S$16 Billion. Moreover, this comprises more than 1,600 customers.
I have been waiting for a good time to enter Ascendas REIT but the valuation has not been very attractive for very long. Of course, as always, timing the market is tough as Ascendas REIT may run up to pre-covid levels and then go on to break all-time highs. My advice is to never time the market as more often than not, the market will turn around, bite you in the ass and leave you behind.
5. Capitaland Integrated Commercial Trust (SGX: C38U)
Capitaland Integrated Commercial Trust, CICT is currently the largest REIT listed in Singapore with a market cap of S$13.6 billion as of June 2021. CICT’s Singapore Portfolio of retail properties malls like Plaza Singapura, Bugis Junction and Tampines Mall. Today, CICT owns 26 properties and have a portfolio property value of S$24.2 billion.
FY2020 was not a good year for CICT as its REITs mainly comprises Retail, Office and Integrated Developments. Sectors such as Retail and Office are the heaviest hit sectors which resulted in a decrease in numbers. While FY2021 was great for many retail and office spaces, we were seeing light for many of these brick and mortar stores.
CICT has a rather Singapore-focused portfolio with over 26 properties and a valuation of S$24.2 billion. CICT continues to embark on Asset Enhancement Initiatives (AEI) to optimise its portfolio and drive rental income growth. An AEI costing S$62 million, CQ @ Clarke Quay has officially commenced.
This year marks the 20th year of listing for CICT. CICT are solid and great investments, to some they are considered ‘best-in-class’ among Singapore REITs. With the reopening of Singapore’s economy and the relaxing of border restrictions, the outlook looks optimistic for CICT as it marks two decades. As one of the largest REITs in Asia Pacific, CICT has the scale and resources to capture growth opportunities in Singapore and abroad.
As we are moving into a rising interest rate environment, DPU could potentially decline further. With another possible rate hike still to come, investors need to be mentally prepared that DPU could decline further. Against such a pessimistic backdrop, dividend investors should be wary of REITs with high leverage ratios. This is because REITs will end up forking out higher finance costs.
For many of these REITs, we have only touched the surface of the REIT themselves. Hence, please do your own due diligence before buying any REITs.
These opinions are solely by Learn To Invest and should not be treated as investment advice.
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Disclaimer: The information provided by LearnToInvest serves as an educational piece and is not intended to be personalized investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.