These 2 REITs Currently Have Distribution Yields Of Over 8%

It’s not a secret that interest rates are low in Singapore and many parts of the world. 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 8% or more at the moment. There were many REITs that popped up. Here are two I randomly selected:  Lippo Malls Indonesia Retail Trust (SGX: D5IU) and AIMS AMP Capital Industrial REIT (SGX: O5RU).

Lippo Malls and AA REIT distribution yield table
Source: SGX Stock Facts; Yahoo Finance

Lippo Malls Indonesia Retail Trust, or LMIRT for short, is currently the only REIT in Singapore’s market that focuses on retail properties in Indonesia. Right now, LMIRT has a portfolio comprising 19 retail malls and seven retail spaces that are located across Indonesia.

The REIT’s latest results was for the quarter ended 30 September 2016. LMIRT had enjoyed a 3.5% year-on-year increase in quarterly gross revenue, a 7.6% increase in net property income, and an even more impressive 11.7% jump in distribution per unit. The REIT also ended the reporting quarter with an occupancy rate of 94.8%, which is higher than its industry’s average of 84.3%.

LMIRT is going to release its results for the fourth quarter of 2016 on 15 February. In the REIT’s third quarter earnings release, it commented that the “Indonesian consumer story is still strongly supported by the country’s large population base and rapidly expanding consumer class with increasing levels of purchasing power and disposable income.”

We’d soon know how the REIT fared in the fourth quarter of 2016 and whether its view of its market dynamics have changed.

AIMPS AMP Capital Industrial, or AA REIT, is next on the list. The REIT focuses on industrial properties and owns 27 properties in all at the moment. 26 of the properties are in Singapore (one of which is a greenfield development) and the remaining one is in Australia.

Last Friday, the REIT released its results for the third quarter of its fiscal year ending 31 March 2017 (FY17). The latest results were for the quarter ended 31 December 2016. In short, it was a tough quarter for AA REIT – it reported year-on-year declines of 6.7%, 6.0%, and 2.8%, respectively, for its gross revenue, net property income, and distribution per unit.

In its earnings release, AA REIT commented that “rentals [in Singapore] continue to be under pressure” due to the “uncertain macroeconomic and geopolitical outlook and the industrial over supply situation.”

Early last year, my colleagues were invited by AA REIT for a tour of some of their properties. Here’s an account of the tour by my colleague Esjay.

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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Editor's note: The original version of this article had mixed up the distribution yield and PB ratio data for Lippo Malls Indonesia Retail Trust and AIMS AMP Capital Industrial REIT. The error has been fixed.


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.