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Here Are 2 REITs With Distribution Yields Of Over 9%

Currently, Singapore’s stock market, as represented by the Straits Times Index (SGX: ^STI), has a yield of around 3%.

I thought it’d be interesting to see which real estate investment trusts (REITs) have yields that are 9% or more (a 9% yield is nearly thrice the market’s yield).

In a screen I ran, two REITs popped up: Soilbuild Business Space REIT (SGX: SV3U) and Cache Logistics Trust (SGX: K2LU).

soilbuild-business-space-reit-and-cache-logistics-trust-yield-table
Source: S&P Global Market Intelligence

Soilbuild Business Space REIT invests primarily in business parks and industrial properties located in Singapore. Currently, the REIT has 11 properties in its portfolio – all of which are located in Singapore – that have a collective value of S$1.19 billion as of December 2015.

In Soilbuild Business Space REIT’s latest reporting quarter (quarter ended 30 June 2016), it reported an occupancy rate of 92.0% for its property portfolio. The trust had maintained its occupancy rate at 100% or near-100% from the third-quarter of 2013 to the second-quarter of 2015. Over the past year, the trust has seen the occupancy rate of its portfolio steadily decline. Soilbuild Business Space REIT currently has a portfolio weighted average lease expiry of 4.6 years.

In its earnings release for the quarter ended 30 June 2016, Soilbuild Business Space REIT commented that the manufacturing sector in Singapore has slowed down in the first-half of the year and that has led to a decline in its portfolio occupancy. It added that the “challenge remains to re-let the vacant space.”

Meanwhile, Cache Logistics Trust has a focus on logistics warehouse properties. It has 19 properties in its portfolio as of 30 June 2016, 12 of which are in Singapore. The remaining seven are located in Australia (six), and China.

The REIT’s 19 properties currently have a total gross floor area, value, and occupancy rate of of 7.51 million square feet, S$1.31 billion, and 95.8%. In Cache Logistics Trust’s latest earnings release, the REIT described its market as being plagued by a “challenging operating environment as well as weak supply and demand dynamics.”

The two REITs mentioned above may have fat distribution yields. But it is worth noting that the yields alone tell us nothing about whether they can sustain their distributions going forward. Investors need to dig into the REIT’s fundamentals before coming to any investment decision.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.