Real estate investment trusts (REITs) are popular among Singaporeans. REITs are obliged to distribute at least 90% of their taxable income to enjoy tax benefits. Therefore, by investing in REITs, investors can receive regular distributions, usually on a quarterly basis.
According to a recent report by Singapore Exchange Limited (SGX: S68), Singapore’s five largest REITs (in terms of market capitalisation) have a distribution yield of 5.6% on average. This is higher than the yield of the SPDR STI ETF (SGX: ES3), which can be taken as a proxy to the Straits Times Index (SGX: ^STI), at 3%. (Note: All market capitalisation and distribution yield data are as at 4 April 2018.)
With that, let’s look at those five REITs and their latest financial performance:
1. With a market capitalisation of S$7.62 billion and topping the list is Ascendas Real Estate Investment Trust (SGX: A17U), an industrial REIT. In the third quarter ended 31 December 2017, the REIT saw its gross revenue grow by 4.1% year-on-year to S$217.3 million while its net property income (NPI) rose 1.7% to S$157.6 million. However, its distribution per unit (DPU) slipped 0.6% to 3.97 cents.
2. Next on the list is retail REIT, CapitaLand Mall Trust (SGX: C38U). For the full year ended 31 December 2017, gross revenue tumbled 1.1% year-on-year to S$682.5 million while NPI slipped 0.3% to S$478.2 million. The declines were mainly due to the non-contribution of Funan, which was closed in July 2016 for redevelopment. Despite the falls, 2017’s DPU inched up 0.3% to 11.16 cents. CapitaLand Mall Trust has a market capitalisation of S$7.27 billion.
3. Coming in third and sporting a market capitalisation of S$6.54 billion is CapitaLand Commercial Trust (SGX: C61U). The commercial REIT posted a 4.6% year-on-year fall in distribution per unit (DPU) to 8.66 cents for the full year ended 31 December 2017. The fall was despite gross revenue for the year growing 13% to S$337.5 million and NPI going up 14.8% to S$265.5 million. An enlarged units base, which arose due to a rights issue in October 2017 to partially fund the acquisition of the retail and office components of Asia Square Tower 2, took a significant toll on the REIT’s DPU.
4. Next in line is a diversified REIT, Suntec Real Estate Investment Trust (SGX: T82U), which owns both retail and office properties. For the full year ended 31 December 2017, gross revenue grew 7.8% year-on-year to S$354.2 million while NPI went up by 8.9% to S$244.5 million. The improvements were due to the contribution from Australia’s 177 Pacific Highway, which was partially offset by lower retail. The REIT has a market capitalisation of S$4.95 billion.
5. Last but not the least, Mapletree Commercial Trust (SGX: N2IU) takes the final spot with a market capitalisation of S$4.55 billion. The REIT, which has stakes in five office and retail assets in Singapore, saw its gross revenue for the third quarter growing 0.8% year-on-year to S$109.7 million. Meanwhile, NPI improved 1.9% to S$86.0 million. The REIT attributed the increases to higher contributions from VivoCity and Mapletree Business City I.
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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 Limited and units of CapitaLand Mall Trust, CapitaLand Commercial Trust and Mapletree Commercial Trust. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited and units in CapitaLand Mall Trust and CapitaLand Commercial Trust.