One of the most popular investment vehicles in the Singapore market is the real estate investment trust, or REIT, thanks to the defensive nature of such investments (real estate) and also the high income payout to unit holders (income distribution).
Moreover, in a low interest-rate environment, where our fixed deposit offers a less than 2% return, REITs become rather attractive alternatives.
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We want to share with you two billion-dollar REITs that are trading at high yields above 6%.
Source: SGX Stock Facts
Manulife US Real Estate Investment Trust
Manulife US Real Estate Investment Trust (SGX: BTOU) is a Singapore-listed REIT that focuses on commercial buildings in the US. The REIT has eight prime properties in its portfolio right now.
The REIT has recently announced a solid quarterly performance. For the quarter ended 30 June 2019, gross revenue surged by 33.2% year on year to US$43.3 million, while net property income improved by 33.8% to US$27.3 million. Similarly, distribution per unit (DPU) grew by 17.7% to 1.53 Singapore cents.
In addition to the solid result above, Manulife US REIT has a number of likeable traits. Firstly, it has a long weighted average lease expiry of 6.2 years. Moreover, the REIT’s gearing of 37.1% is still some distance away from the regulatory ceiling of 45%, giving it more room for future growth.
The market, however, is not too optimistic about the REIT right now. Thus, investors who think Manulife US REIT will continue to perform can buy shares now at a high distribution yield of 6.8%.
Cromwell European REIT
Cromwell European REIT (SGX: CNNU) focuses on income-producing real estate assets in Europe that are used primarily for office, light industrial/logistics, and retail purposes. As of July 2019, it had 102 properties across various countries including Denmark, France, Germany, and others.
Since its IPO in late 2017, Cromwell European REIT’s share price has been trending marginally lower. Yet, its financials have come ahead of its IPO forecast for its first financial year ended 31 December 2018.
Moreover, its strong performance continues in the first half of 2019. Gross revenue was up by 32.5% year on year, while net property income came in higher by 33.7% year on year. Also, DPU came in 3.0% higher at 2.04 euro cents.
Like with Manulife US REIT, investors are generally not too excited about Cromwell European REIT, but there’s one thing they should be excited about: its high distribution yield. Enterprising investors might want to dig further to better understand the REIT’s long-term prospects.
Update your watch list
Investors should remember that low prices alone aren’t enough to justify a buy decision. So before you put your money in, consider putting these stocks on your watch list for now to give you time to carry out your research on these REITs’ future income prospects.
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 Lawrence Nga doesn’t own shares in any companies mentioned.