Here’s 1 REIT With A High Distribution Yield Of Over 8%

Real estate investment trusts are well-liked investment vehicles in Singapore. One popular feature about them are their high dividend yields (technically, a REIT’s dividend is known as a distribution).

In this article, I will like to share about one REIT with a high distribution yield of over 8%: Lippo Malls Indonesia Retail Trust (SGX: D5IU).

As a quick introduction, Lippo Malls is the first and only REIT in Singapore’s stock market that focuses on retail properties in Indonesia. It was listed nearly 10 years ago on 19 November 2007, and has a portfolio of 21 retail malls and seven retail spaces across Indonesia, as of 30 June 2017.

In the second quarter of 2017, the REIT reported a 6.6% year-on-year increase in gross revenue to S$49.9 million. Similarly, its net property income grew by 8.6% to S$46.8 million. The higher net property income flowed to Lippo Malls’ investors, as the REIT’s distribution per unit increased by 5.9% to 0.90 cents.

Lippo Malls’ growth in the quarter was driven mainly by positive rental reversions of an impressive 13% in its malls, as well as a maiden contribution from Lippo Mall Kuta, which was acquired in December 2016.

The REIT also reported a low gearing ratio of 30.6% (REITs in Singapore have a regulatory gearing limit of 45%) in the second quarter of 2017, along with a market-beating occupancy rate for its portfolio (94.3% vs the market average of 85.0%).

Commenting on the start of its market in its earnings release, Lippo Malls said that “Based on preliminary figures from Bank Indonesia, retail sales in Indonesia rose 6.7% in June 2017, due to the seasonal surge in public demand during the Ramadan and Aidilfitri season.”

For investors in Singapore who are interested in Indonesia’s retail sector, Lippo Malls could be a good candidate for further research. At its current price of $0.44, Lippo Malls has a distribution yield of 8.1%, according to SGX Stock Facts. The REIT also has a price-to-book ratio of 0.9.

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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.