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Here Are 2 REITs With Distribution Yields Of 7% Or More

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 7% or more at the moment. There were many REITs that popped up. Here are two I randomly selected:  Frasers Commercial Trust (SGX: ND8U) and Mapletree Logistics Trust (SGX: M44U).

Lawrence - Frasers Commercial Trust and Mapletree Logistics Trust table
Source: SGX Stock Facts; Yahoo Finance

Frasers Commercial Trust’s current portfolio consists of six commercial properties in Singapore and Australia. At the local front, the REIT owns China Square Central, Alexandra Technopark and 55 Market Street.

Frasers Commercial Trust released its latest results last week. For the quarter ended 31 December 2016, the REIT produced a 0.1% year-on-year increase in gross revenue and a distribution per unit that stayed flat compared to a year ago.

Although the REIT delivered a stable performance in the reporting quarter, looking ahead, Frasers Commerical Trust commented that it is “aware that market conditions are overall anticipated to remain challenging for some time.”

Moving on, Mapletree Logistics Trust is the Singapore stock market’s first Asia-focused logistics REIT.

Its properties are located near to major expressways and established logistics clusters in eight geographic markets across the Asia Pacific region, namely Singapore, Australia, China, Malaysia, Hong Kong, Japan, South Korea and Vietnam.

Last week, the REIT released its results for the third quarter of its fiscal year ending 31 March 2017 (FY16/17). In the three months ended 31 December 2016, Mapletree Logistics Trust saw its gross revenue grow by 7.4% compared to the same period a year ago. But, its distribution per unit remained unchanged.

In its earnings release, the REIT commented that the “leasing environment remains challenging with continued pressure on occupancy and rental rates” as a result of the “uncertain economic outlook.” But, it also expressed some optimism: Mapletree Logistics Trust thinks that its “diversified portfolio, large tenant base and well-staggered lease expiry profile should provide resilience to the portfolio.”

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.

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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.