Globally, there has been much to concern investors. From a trade war with no end in sight to the potential of a no-deal Brexit, investors certainly have had little joy in months. Amid global uncertainty, Singapore investors might want to consider adding some defensive stocks to their portfolio.
With that said, here are two solid Singapore REITs I think investors should consider.
Parkway Life REIT (SGX: C2PU)
This healthcare REIT has been the epitome of stability. Not only has it paid a regular distribution but its distribution per unit (DPU) has also more than doubled since its listing in 2007.
Parkway Life REIT is also a great defensive stock as its Singapore properties – Mount Elizabeth, Gleneagles and Parkway East hospitals have long leases, with annual upward revision. These contribute close to 60% of the REIT’s entire gross revenue. As such, investors need not fret over currency fluctuations.
The REIT also owns 46 healthcare-related assets in Japan. Its properties in Japan also have long average lease expiries and most of them have up-only annual rental reviews, providing visible rental income growth over the coming years.
Although Parkway Life REIT may have a low yield of 4.2% compared to the 6% average yield of REITs in Singapore, its stellar track record and stability make it a good defensive option.
Mapletree Commercial Trust (SGX: N2IU)
With the uncertainty globally, it may make sense to have some exposure to Singapore real estate as rental income from properties here are not susceptible to currency fluctuations. Mapletree Commercial Trust is a great candidate in this respect.
The REIT owns Singapore’s largest shopping centre, VivoCity, along with Mapletree Business City I, PSA Building, Mapletree Anson and Bank of America Merrill Lynch HarbourFront.
In the 12 months ended 31 March 2019, VivoCity’s revenue and net property income grew by 3.0 and 3.6% respectively.
More importantly, VivoCity, which remains Mapletree’s biggest revenue contributor, looks primed to deliver higher revenue in the future. The renovation works at the mall are set to be completed by September 2019 and management said it expects a 40% return on investment and positive rental uplift. What’s more, the Greater Southern Waterfront initiative could also see the REIT attract even more visitors in the future.
Based on its last quarter results, Mapletree Commercial Trust has an annualised yield of 4.0%. As with Parkway Life REIT, this is comparatively lower than other Singapore-listed REITs. However, Mapletree Commercial Trust’s good track record, potential for growth and limited exposure to foreign currency risk make it a safer investment during a market downturn.
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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 has recommended shares of Mapletree Commercial Trust and Parkway Life Real Estate Investment Trust. Motley Fool Singapore contributor Jeremy Chia does not own shares in any companies mentioned.