Differences between CapitaCommercial Trust and Frasers Commercial Trust Investors Have To Know

REIT coins

Two of the more well-known real estate investment trusts in Singapore which focus on commercial properties are namely, Frasers Commercial Trust (SGX: ND8U) and CapitaCommercial Trust (SGX: C61U). At first glance, given their labels as Commercial REITs, both might seem similar for investors.

However, there are key differences between the two and investors should be aware of them. Here’re a few of the differences.

International exposure

There is a huge difference in the international exposure which the two REITs have. Despite being the much larger entity between the two, more than 99% of CapitaCommercial Trust’s assets are based in Singapore – its only foreign exposure comes from a small stake in the Malaysia-based Quill Capita Trust (Malaysia).

Frasers Commercial Trust on the other hand, sees more than half its net property income come from Australia. In addition, more than one third of its asset value is based in the country too.

Property diversification

Frasers Commercial Trust currently only has five properties in its portfolio. Thus, the REIT has a higher degree of concentration risk in the sense that the underperformance of one property – be it due to renovation or a failure to attract tenants –  might have a large impact on its overall performance.

CapitaCommercial Trust currently manages nine properties in Singapore and is expecting its tenth, CapitaGreen, to be completed by the end of this year. With 10 properties soon to be in its portfolio, CapitaCommercial Trust can be considered to be more diversified compared to Frasers Commercial Trust.

Distribution yield

For investors in REITs, the distribution yield of a trust is a very important factor to be considered. CapitaCommercial Trust, being the largest and first commercial trust to be listed in Singapore, seems to have a premium attached to it by the market –  the REIT offers a distribution yield of 5% at its current price of S$1.70 per unit. Frasers Commercial Trust, on the other hand, offers a more attractive yield of 6.3% at its current price of S$1.40 per unit.

Foolish Summary

For investors interested in the commercial property space, CapitaCommercial Trust and Frasers Commercial Trust would likely be possible candidates given their size and presence in Singapore’s share market. But, they aren’t even close substitutes for each other due to the differences described above. Do bear that in mind.

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