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These 2 REITS Have a Distribution Yield of 8% Now

Real estate investment trusts (REITs) are a popular investment vehicle in Singapore due the high income pay out to unit holders. Moreover, in a low interest rate environment where our fixed deposit offers less than 1% in interest, REITs become an attractive alternative.

In this article, I would like to share with you two REITs that are yielding 8% in the Singapore market at the moment.

The first REIT will be IREIT Global (SGX: UD1U).

As a quick introduction, IREIT focuses mainly in investing in a portfolio of income-producing real estate in Europe. Its portfolio comprises of five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.

The REIT’s assets have a long term lease, with a weighted average lease expiry of 5.5 years. As of June 2017, the committed occupancy for the REIT was 98.7%.

For investors who are interested in this REIT, it is important that they pay attention to two points.

Firstly, there is currency exposure to this investment as IREIT Global derives its income in Euro. Secondly, there is a concentration of income whereby the top five tenants account for more than 95% of the total rental income.

At $0.77, the trust is yielding 8% and is going at 1.2 times its book value.

The next REIT is Cache Logistics Trust (SGX: K2LU) or Cache.

The REIT focuses on logistics assets and has 19 logistics warehouse properties in its portfolio. The assets are located in established logistics clusters in Singapore, Australia, and China.

For its second quarter, Cache reported that gross revenue was down by 0.7% year-on-year while net property income dipped by 4%. Distribution per unit dropped to 1.8 cents.

The weaker performance was due to a lower contribution from 51 Alps Ave and divestment of Cache Changi Districentre 3 in January 2017.

On a positive note, occupancy rate was high at 98.3%, as of June 2017.

At $0.835, the REIT is trading at a distribution yield of 8.74% and has a price to book ratio of 1.1.

A Foolish conclusion 

So there you go, two REITs that are trading at high yield of 8%. Investors should be reminded, however, that low price alone is enough to justify a buy decision. Thus, it is important the investors carry on their research on the trust’s future income prospects before committing any capital.

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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.