Real Estate Investment Trusts (REITs) have grown in popularity in Singapore. Not only do they provide investors with exposure to a wide array of real estate classes, they also offer relatively high and consistent dividends (technically REIT dividends are called distributions but let’s not split hairs here).
With that in mind, here are two REITs in my portfolio that are offering fat yields at the moment.
Shopping for dividends
Sasseur Real Estate Investment Trust (SGX: CRPU) is a specialised outlet mall REIT in China. The trust, which owns four malls, had a fantastic debut year as a listed company. Its distribution per unit (DPU) was 9.3% higher than it had forecast in its initial public offering (IPO) prospectus.
The REIT also looks set to continue increasing its DPU in the future. For one, there is a clear upward trend in VIP members and tenant sales. This is especially important for Sasseur REIT, which has a portion of its income tied directly to tenant sales.
In addition, the REIT announced its first acquisition a few months ago. While the acquisition is small, it demonstrates that the REIT might be willing to use its financial muscle if another accretive opportunity arises. Sasseur’s gearing ratio of 29.2% is well below the 45% regulatory cap, which should provide it with the financial muscle to make debt-funded acquisitions in the future.
Most importantly, investors can pick up units at S$0.80, which represents a 10% discount to book value and an attractive annualised yield of 8.3%.
Still in good health…
First Real Estate Investment Trust (SGX: AW9U) was in the spotlight for all the wrong reasons last year. The healthcare REIT suffered a major sell-off after its sponsor and main tenant, Lippo Karawaci, suffered a credit downgrade, which raised fears that it would face liquidity issues and might not be able to renew its leases with First REIT.
However, there has been some good news this year as Lippo Karawaci secured US$1.01 billion through a rights issue and asset divestment. The injection of cash should allay some of last year’s fears.
While First REIT’s unit price has climbed steadily since then, it still sports relatively attractive valuations while it also has a solid record of growing dividends. At its current price of S$1.09, it trades at a price-to-book ratio of 1.05 and has a fat yield of 7.9%.
Want to keep reading on how to lock in those sweet REIT dividends? Our Complete Guide To Buying The Best Singapore REITs dives into what we think you need to know about finding the best REITs that regularly hand you a fat dividend cheque. Click here to download your FREE guide.
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 First Real Estate Investment Trust. Motley Fool Singapore contributor Jeremy Chia owns shares in First Real Estate Investment Trust and Sasseur Real Estate Investment Trust.