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Singapore’s Most Consistent REITs

Singapore_SkylineI have always viewed REITs as a lazy-man’s buy-to-let investment. Through a REIT, an investor could enjoy many of the benefits that a traditional landlord could, such as capital appreciation and rental income. But it comes with few of the headaches that include dealing with awkward tenants and worrying void periods when you don’t receive any income at all.

Another advantage of REITs is that you can liquidate your bricks-and-mortar investment any time you want. With a click of the mouse, you could sell your investment to another investor. What’s more, you could if you want, sell just a portion of your investment. With a proper property, though, it would be almost impossible to sell a condo or an apartment one brick at a time.

However, there are drawbacks to RETs. When you invest in a REIT you expect the management to run the property portfolio in such a way that you receive regular income. After all, that is what most REIT investors want – regular income.

The table below lists three Singapore-listed REITs that have increased their payout to shareholders consistently over the last five years.

Company Dividend growth   rate Yield
Parkway Life REIT (SGX: C2PU) 16.2% 3.9%
Frasers Centrepoint   Trust (SGX:   J69U) 9.1% 4.6%
CapitaRetal China   Trust (SGX: AU8U) 8.9% 5.3%

Source: Capital IQ

Parkway Life is one of Asia’s largest healthcare REITs. In Singapore we probably know it best for being the owners of Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. Elsewhere, it has property assets in the Asia Pacific region that include Malaysia and Japan. In total it has 37 properties with a portfolio value of around $1.4b. Over the last five years, Parkway Life has raised its dividend every year for the last five years and currently yields 3.9%.

If you go to IKEA in Queenstown, you can’t fail to spot Anchorpoint, which is part of Fraser Centrepoint Trust’s portfolio of properties. The company, which was formed in 2006, also owns the suburban retail mall Causeway Point in Woodlands. The company said its aim is to deliver regular and stable distribution to shareholders, which has done since its formation six years ago. It has ratcheted up its payout at around 9% a year and currently yields 4.6%.

CapitaRetail China has retail malls in China as far north as Beijing and as far south as Hubei. It was formed in 2006 and was the first China-focussed shopping mall REIT to be listed on the Singapore market. It has consistently raised its dividend for five years at a rate of about 9% a year. CapitaRetail China could be one way to gain exposure to Chinese consumers, if you believe that the country will rebalance its economy towards consumerism. CapitaRetail China’s tenants included Spain’s Zara, Japan’s Uniqlo, America’s McDonald’s and KFC and our very own BreadTalk.

REITs could be a convenient way for investors to get some exposure to the property sector. However, it is worth pointing out that the REITs discussed here are trading above their Net Asset Values. That might suggest the shares are overpriced but it might also suggest that investors believe these companies may continue to deliver rising income.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.