Here Are 2 REITS With Distribution Yields Of Over 9%

It’s not a secret that interest rates are low in Singapore and many parts of the word. Some investors and market commentators believe that this has pushed up valuations of companies, hence resulting in low dividend yields.

Thing is, not every listed entity in Singapore’s stock market have low yields. I had used a stock screener provided by bourse operator Singapore Exchange Limited (SGX: S68) to find real estate investment trusts with a yield of more than 9%.

Turns out, a few REITs had popped up. Here are two I randomly selected: Soilbuild Business Space REIT (SGX: SV3U) and Lippo Malls Indonesia Retail Trust (SGX: D5IU).

Source: SGX Stock Facts and Yahoo Finance

Soilbuild Business Space REIT invests primarily in business spaces and industrial properties in Singapore. The REIT currently has 12 properties in its portfolio that are valued at S$1.29 billion in all.

For the quarter ended 30 September 2016, Soilbuild Business Space REIT reported a 3.9% and 5.7% decline in its distributable income and distribution per unit, respectively. The REIT also ended the quarter with a portfolio occupancy rate of 94.8%, down from the 98.7% seen a year ago.

The REIT’s unit price has declined by nearly 20% over the last 12 months.

We now turn to Lippo Malls Indonesia Retail Trust, which owns retail malls and spaces in Indonesia. The REIT’s current portfolio comprises 19 malls and seven retail spaces. As of end-2015, this portfolio has a net lettable area of 765,273 square metres and a total value of S$1.8 billion.

Lippo Malls Indonesia Retail Trust experienced solid growth in the third-quarter of 2016. When compared to the same quarter a year ago in Singapore-dollar terms, the REIT saw its gross rental income, distributable income, and distribution per unit grow by 3.5%, 12.4%, and 11.7%, respectively.

The REIT also ended the third-quarter of 2016 with a portfolio-wide occupancy rate of 94.8%. This is higher than (1) the 93.9% seen a year ago, and (2) the industry average of 84.3% for the reporting quarter.

A Foolish conclusion

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.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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