REITs, which is the short form for Real Estate Investment Trusts for short, are popular among retail investors looking to build a dividend portfolio for its high distribution yield (of at least 4.0%) as they are required to pay out 90% of their earnings as distributions to unitholders to qualify for tax benefits. On top of it, many of the REITs pay out a distribution to its unitholders either once every quarterly, or once every half-yearly.
In terms of what these REITs do, and how they generate their income, they invest in income-producing properties (either in Singapore, overseas, or a mixture of both), and income is generated mainly through rentals they collect from the tenants (when they lease the spaces in the properties owned by the REITs.)
In this particular post, I will be sharing with you the 7 different assets types that REITs listed in Singapore invests in:
1. Retail Properties
2 words to describe what they are – shopping malls, and I’m sure living in a hot and humid country like Singapore, these malls are one of your ‘go to’ during weekends and public holidays to escape from the scorching weather.
Portfolio occupancy for the shopping malls in Singapore are way past 90%, with tenant sales already surpassing pre-pandemic levels.
There are a total of 8 REITs and business trusts in Singapore that invests in retail properties and they are as follows:
i. Frasers Centrepoint Trust (SGX:J69U)
ii. Paragon REIT (SGX:SK6U)
iii. Starhill Global REIT (SGX:P40U)
iv. Sasseur REIT (SGX:CRPU)
v. United Hampshire US REIT (SGX:ODBU)
vi. BHG Retail REIT (SGX:BMGU)
vii. Lippo Malls Indonesia Retail Trust (SGX:D5IU)
viii. Dasin Retail Trust (SGX:CEDU)
2. Office Properties
Again this is pretty much self-explanatory, where the assets are used for office purposes.
As far as the portfolio occupancy of the office properties in Singapore goes, they have been maintained at above 90%. Why is it so despite companies downsizing their office spaces to adopt hybrid working? It is because of Singapore’s position as the ‘financial hub of Asia’ in that, whenever corporations overseas want to expand in Asia, Singapore is more often than not one of the countries in mind. So, the REITs will have no problem in filling up the office spaces.
There are a total of 6 REITs that invests in office properties, and they are as follows:
i. Keppel REIT (SGX:K71U)
ii. Prime US REIT (SGX:OXMU)
iii. Keppel Pacific Oak US REIT (SGX:CMOU) – do take note that trading of this counter is in US dollar
iv. Manulife US REIT (SGX:BTOU) – do take note that trading of this counter is in US dollar
v. IREIT Global (SGX:U1DU)
vi. Elite Commercial REIT (SGX:MXNU) – do take note that trading of this counter is in British Pounds
3 & 4. Industrial & Logistics Properties
As the name suggests, they are used for industrial and logistics purposes.
One thing to note about these properties is that, they are among the most resilient during the peak of the pandemic in 2020, where a majority of the tenants are allowed to continue with their business activities as they are deemed to be in ‘essential businesses’.
There are a total of 8 REITs that invests in such properties, and they are as follows:
i. CapitaLand Ascendas REIT (SGX:A17U)
ii. Mapletree Logistics Trust (SGX:M44U)
iii. Mapletree Industrial Trust (SGX:ME8U)
iv. ESR-LOGOS REIT (SGX:J91U)
v. AIMS APAC REIT (SGX:O5RU)
vi. Sabana Industrial REIT (SGX:M1GU)
vii. EC World REIT (SGX:BWCU)
viii. Daiwa House Logistics Trust (SGX:DHLU)
Out of the 8, three of them are constituents of Singapore’s benchmark Straits Times Index (also known as the STI for short), namely CapitaLand Ascendas REIT, Mapletree Logistics Trust, as well as Mapletree Industrial Trust.
5. Hospitality Assets
These assets include hotels and serviced apartments, along with student accommodations.
While hospitality REITs are the worst affected during the Covid-19 pandemic where border closures saw demand for hotels and serviced apartments coming to a halt (and many of the REITs reported huge decline in their earnings), but saw swift recovery when borders reopened with demand coming from leisure and business travellers. Tailwinds are likely going to continue in the near-term from the return of Chinese visitors.
There are a total of 6 REITs that invest in these hospitality assets, and they are:
i. CapitaLand Ascott Trust (SGX:HMN)
ii. CDL Hospitality Trust (SGX:J85)
iii. Far East Hospitality Trust (SGX:Q5T)
iv. Frasers Hospitality Trust (SGX:ACV)
v. ARA US Hospitality Trust (SGX:XZL) – do take note trading for this counter is in USD.
vi. Eagle Hospitality Trust (SGX:LIW) – do take note that trading for this counter is currently suspended due to one of its units defaulting on its loan.
6. Healthcare Assets
Healthcare assets can be in a form of hospitals, nursing homes, and medical centres.
With population around the world ageing (where 1 in 6 people will be aged 60 or older by 2030), I am of the view that demand for these healthcare assets will continue to remain high.
There are just 2 healthcare REITs listed on the Singapore Exchange, and they are:
i. Parkway Life REIT (SGX:C2PU)
ii. First REIT (SGX:AW9U)
7. Data Centre Assets
These assets are used to house servers, which are used to store, process, and distribute data. Because of the heat produced by the servers, cooling systems will be needed in these data centre assets.
With the world moving towards cloud computing, plus the proliferation of artificial intelligence/machine learning (AI/ML), and things like 5G, demand for data centres to store all these data is expected to remain resilient.
There are 2 pure-play data centre REITs listed on the Singapore Exchange, and they are:
i. Keppel DC REIT (SGX:AJBU)
ii. Digital Core REIT (SGX:DCRU) – do take note that trading of this counter is in US dollar
8. Diversified REITs
Last but not least, we have several REITs and business trusts in Singapore that invests in a mix of different asset types, as follows:
i. CapitaLand Integrated Commercial Trust (SGX:C38U) – it invests in retail and office assets
ii. Mapletree Commercial Trust (SGX:N2IU) – it invests in retail and office assets
iii. Suntec REIT (SGX:T82U) – it invests in retail and office assets
iv. OUE Commercial REIT (SGX:TS0U) – it invests in retail, office, and hospitality assets
v. CapitaLand China Trust (SGX:AU8U) – it invests in retail, office, and logistics assets
vi. Lendlease Global Commercial REIT (SGX:JYEU) – it invests in retail and office assets
vii. CapitaLand India Trust (SGX:CY6U) – it invests in industrial and logistics assets, as well as data centre assets.
viii. Cromwell European REIT (SGX:CWBU) – it invests in office and industrial assets; do take note that trading of this counter is in Euro.
ix. Frasers Logistics & Commercial Trust (SGX:BUOU) – it invests in office and industrial assets.
Among the 9, three of them are constituents of Singapore’s benchmark STI, and they are: CapitaLand Integrated Commercial Trust, Mapletree Commercial Trust, as well as Frasers Logistics & Commercial Trust.
For those of you who are new to REITs, I hope the contents presented in this post will give you a better understanding of each of the 7 different property types the REITs invests in, as well as the REITs that invests in each property type.
Having said that, not all REITs are worthy of a place in your investment portfolio. You can find out my selection criteria (on how I pick REITs to add to my investment portfolio) in my newly published book titled ‘Building Your REIT-irement Portfolio’ – written specially for people who are new to investing and would like to build your own REIT portfolio, you will learn about the nuts and bolts to go about doing so.
You can find out more about this book, along with making your purchase here – You have the option to purchase a digital copy of the book (which you can immediately download a PDF of it after payment), or a physical copy (I will be mailing it to you after payment is received).
Disclaimer: At the time of writing, I am a unitholder of Frasers Centrepoint Trust, CapitaLand Ascendas REIT, Mapletree Logistics Trust, Mapletree Industrial Trust, EC World REIT, Keppel DC REIT, CapitaLand Integrated Commercial Trust, Mapletree Commercial Trust, Suntec REIT, and CapitaLand India Trust.
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