Real Estate Investment Trusts (REITs) are known for their consistent and relatively high yield. The average REIT in Singapore currently sports an attractive yield of around 6% per annum.
However, that’s not all. On top of distributions, capital appreciation provides investors with additional upside. In fact, there are a few REITs in Singapore which have more than doubled in value since going public. With that said, here are two REITs that have more than doubled shareholders’ money since their initial public offering.
Parkway Life REIT (SGX: C2PU)
Listed in 2007, Parkway Life REIT is a specialised healthcare REIT that invests primarily in hospitals and nursing homes. The REIT has been one of the most consistent REITs in terms of growing its distribution per unit (DPU). Between 2007 and 2018, Parkway Life REIT’s DPU has increased by a staggering 103.6%.
Naturally, market participants have reacted by driving its unit price up. The healthcare REIT went public in 2007 at S$1.28 per unit and now trades at S$2.87, a 124% gain from its IPO price.
The trust has continued to deliver growth in recent times. In the three-month period ended 31 March 2019, DPU increased 3.5% from the corresponding period last year and the REIT managed to lower its all-in cost of debt from 0.97% to 0.91%, which should lead to higher net margins in future.
That said, investors should note that Parkway Life REIT units do not come cheap. At the time of writing, it sports a price-to-book ratio of 1.53 and has a relatively low distribution yield of 3.9%.
Ascendas Real Estate Investment Trust (SGX: A17U)
Listed in 2002, Ascendas REIT was one of the first REITs to list in the Singapore stock market. At that time, Ascendas REIT had a portfolio of eight properties worth about S$636 million. Fast forward to today and Ascendas REIT is Singapore’s largest business space and industrial REIT with 171 properties valued at S$11.1 billion. Like Parkway Life REIT, Ascendas REIT has managed to increase DPU during this time. Since going public, DPU has more than doubled from 7.63 Singapore cents in FY02/03 to 16.035 Singapore cents in FY18/19. That translates to a compounded growth of 4.8% per annum.
Its share price has also increased more than three-fold since listing and as of the time of writing trades at S$2.98 per unit, up substantially from its IPO price of S$0.88 per unit. In the quarter ended 31 March 2019, Ascendas REIT extended its winning streak of growth as DPU increased by 3.8%. The REIT’s full financial year DPU, which ended on 31 March also increased by 0.3%, with gross revenue up 2.8%.
In addition, its existing portfolio had a valuation gain of S$110 million during the year and portfolio rental reversion for the year was positive 6.6%, which bodes well for upcoming quarters. At the time of writing, units of Ascendas REIT sport a price-to-book ratio of 1.39 and have a distribution yield of 4.44%.
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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 recommends Parkway Life REIT. Motley Fool Singapore contributor does not own shares in any REITs mentioned.