Real estate investment trusts (REITs) have grown in popularity in Singapore. Not only do they provide investors with exposure to a wide range of real estate types, but REITs also have comparatively high yields and enjoy tax benefits.
With that said, I have rounded up the three highest-yielding REITs in the Singapore market right now.
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Topping this list is Lippo Malls Indonesia Retail Trust (SGX: D5IU). Based on its unit price of S$0.22. The Indonesian retail REIT has a trailing distribution yield of 8.8%. The REIT has suffered a sharp decline in its distribution per unit (DPU) in the past due to the introduction of new taxes in Indonesia, higher operating expenses and realised foreign exchange losses.
However, there was some good news for the REIT in the most recent quarter. The REIT, which is backed by Lippo Karawaci reported a 1.7% uptick in DPU. This marked the first time in five quarters that the REIT delivered higher year-on-year DPU. Nevertheless, the REIT continues to face stiff challenges after the expiry of some of its master leases in July 2018 and lower casual leasing income.
Second on the list is another REIT that is backed by the much-maligned Lippo Karawaci Tbk, First Real Estate Investment Trust (SGX: AW9U). At its current unit price of S$1.03, First REIT has a trailing distribution yield of 8.3%.
Investors were scared off late last year when First REIT’s sponsor and majority tenant, Lippo Karawaci suffered a credit downgrade. This raised concerns on whether Lippo would extend its master leases when they expire.
However, there was some positive news this year as Lippo Karawaci secured US$1.01 billion in funding through a rights issue and divesting some of its assets. The cash injection should provide it with the liquidity to pay off its rental obligations.
The healthcare REIT reported a 1.2% uptick in distributable income in the second quarter of 2019, while its DPU remained unchanged from a year ago.
Rounding the list off is EC World Real Estate Investment Trust, with a trailing distribution yield of 8.3%. The trust, which owns seven properties in China, recently announced a proposed acquisition that is expected to be DPU-accretive.
In the most recent quarter, the REIT reported a mixed set of results as net property income declined 7.2% from a year ago. However, taking into account straight line, security deposit accretion and other relevant distribution adjustments, the NPI in RMB terms actually increased by 3.4%.
EC world REIT also boasts a long weighted average lease expiry (WALE) of 4.6 years by gross rental income and built-in annual rental escalations with most of its tenants.
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. Motley Fool Singapore contributor Jeremy Chia owns shares in First Real Estate Investment Trust and EC World Real Estate Investment Trust. The Motley Fool Singapore has a recommendation for First Real Estate Investment Trust.