Here Are 2 of Singapore’s Best Real Estate Investment Trusts

According to stock exchange operator Singapore Exchange, there are 28 real estate investment trusts and six stapled trusts listed in Singapore at the start of 2015.

With that many options, how might an investor choose between the various trusts? There are a number of ways to look at the business fundamentals of REITs, but one key thing which helps drive the underlying economic value of a REIT would be the growth in its distributions per unit (DPU).

A focus on a REIT’s DPU can also help investors better understand the future income they might be able to receive from the trust.

Keeping these in mind, I had screened for the REITs and trusts that were able to grow their DPU in each consecutive year stretching back to 2007. I had done so because I wanted to know which REITs had the most stable rental incomes since 2007 was the start of the Great Financial Crisis; if that period of financial turmoil couldn’t ding their pay outs, then they can at least be great candidates for further research.

Of the group of 34 trusts, only 16 had track records that stretched back that far; and of that group of 16, only two were able to fulfil my criteria of having consistent DPU growth. They are Frasers Centrepoint Trust (SGX: J69U) and Parkway Life REIT (SGX: C2PU). Here’s how their track record of distribution growth has looked like:

REITs distribution growth

Source: S&P Capital IQ

None of the above is meant to say that Frasers Centrepoint Trust and Parkway Life REIT would necessarily make for good investments. There are other important issues that investors need to consider (some issues include the types of properties the REITs have, the health of their balance sheets, their debt-maturity profiles, and their valuations) before any investing decision can be reached.

There are also other REITs which may do much better than Frasers Centrepoint Trust and Parkway Life REIT in the other important areas. But on the basis of consistent distribution growth at least, these two REITs are indeed the best of the bunch in Singapore.

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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 writer Chong Ser Jing doesn't own shares in any companies mentioned.