Real estate investment trusts, or REITs, are popular investment choices in the Singapore stock market. That’s because REITs tend to have high distribution yields due to their need to distribute up to 90% of their taxable income to unitholders in order to enjoy tax transparency.
In this article, I would like to share with you three billion dollar REITs that are trading at high yields of about 7%. Those REITs are CapitaLand Retail China Trust (SGX: AU8U), Frasers Commercial Trust (SGX: ND8U) and First Real Estate Investment Trust (SGX: AW9U).
Source: SGX StockFacts
In this article, I will focus on the last REIT — First Real Estate Investment Trust.
As a quick introduction, First REIT is a healthcare-focused real estate investment trust. It currently has a portfolio of 20 properties (16 in Indonesia, three in Singapore, and one in South Korea) that are mostly healthcare-related facilities. The REIT’s sponsor is Indonesia’s largest listed property company, PT Lippo Karawaci Tbk.
For the quarter ended 30 June 2018, First REIT’s gross revenue increased 5.3% while its net property income improved 5.0% as compared to the same period last year. The improvement was primarily due to contributions from the newly-acquired Siloam Hospitals Buton & Lippo Plaza Buton, and Siloam Hospitals Yogyakarta, as well as increased rental income from existing properties in Singapore and Indonesia. Consequently, distribution per unit came in at 2.15 cents, 0.5% higher than the same period last year.
The Foolish conclusion
So there you go, three REITs that are trading at yields of around 7%. Investors should be reminded, however, that low price alone is enough to justify a buy decision. Thus, it is important the investors do 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. Motley Fool Singapore has recommendations for CapitaLand Retail China Trust and First Real Estate Investment Trust.