Singapore’s Central Provident Fund (CPF) has done an excellent job in building up Singaporeans’ retirement savings.
However, the interest rate on the CPF Ordinary Account (OA) is only 2.5%, not enough to exceed the current core inflation rate of 3.6% in February 2024.
You could contact Singapore Savings Bonds or SSB.
However, this risk-free investment is also faced with an interest rate that has fallen to 2.88% and cannot keep pace with inflation.
However, there is good news.
We present four Singapore REITs with distribution yields that outperform both the CPA OA and the SSB that you can consider for inclusion in your portfolio.
Frasers Logistics & Commercial Trust (SGX:BUOU)
Frasers Logistics & Commercial Trust (FLCT) has a portfolio of 108 properties in Singapore, the Netherlands, Germany, Australia and the UK.
The portfolio’s assets under management amounted to S$6.7 billion as of December 31, 2023.
For the financial year 2023 (FY2023), ending 30 September 2023, FLCT reported a 6.5% year-on-year decrease in revenue to S$420.8 million.
Adjusted net property income (NPI) decreased 9% year-on-year to S$311.4 million, while distribution per unit (DPU) decreased 7.6% year-on-year to S$0.0704.
FLCT shares offer a trailing distribution yield of 6.6%.
The logistics and trading REIT provided a comprehensive update for the first quarter of its fiscal year 2024 (Q1 FY2024).
The portfolio recorded a strong positive rent decline of 18.2% while maintaining a high occupancy rate of 95.8%.
With total debt at just 30.7%, the REIT has significant debt headroom of S$1.1 billion to reach 40%.
Earlier this month, FLCT announced the acquisition of four industrial properties in Germany from its sponsor. Frasers Real Estate GmbH (SGX:TQ5).
The acquisition, which has a positive impact on the DPU value, increases FLCT’s debt ratio to around 32.5%.
CapitaLand Ascendas REIT (SGX:A17U)
CapitaLand Ascendas REIT or CLAR is Singapore’s largest industrial REIT with a portfolio of 232 properties valued at S$16.9 billion (as of December 31, 2023).
CLAR reported mixed results for 2023, with gross revenue increasing 9.4% year-on-year to S$1.5 billion.
The NPI rose 5.6% year-on-year to S$1 billion.
However, due to higher financing costs and an increase in units issued, DPU decreased 4% year-on-year to S$0.1516.
CLAR shares offer a trailing distribution yield of 5.5%.
Despite the lower DPU, the industrial REIT reported a high portfolio utilization of 94.2%.
In addition, a positive rental yield of 13.4% was achieved over the course of the year.
The value of the real estate portfolio also increased by 3% year-on-year to S$16.9 billion.
CLAR is currently implementing five portfolio quality improvement projects valued at approximately S$551 million.
Mapletree Industrial Trust (SGX:ME8U)
Mapletree Industrial Trust or MIT is an industrial REIT with a portfolio of 56 properties in the United States, 85 in Singapore and one in Japan.
Its assets under management amounted to S$9.2 billion as of 31 December 2023.
MIT also reported mixed results for the third quarter of its fiscal year 2024 (3Q FY2024), which ended December 31, 2023.
Gross revenue improved 2% year-on-year to S$173.9 million, while NPI increased 0.8% year-on-year to S$129.9 million.
However, DPU decreased 0.9% year-on-year to S$0.0336.
MIT’s DPU for the last 12 months was S$0.134, giving its shares a distribution yield of 5.8%.
The REIT was able to record positive rental returns in all of its real estate segments.
Total debt was 38.6 percent and average total debt costs were 3.1 percent.
Nearly 80% of the REIT’s loans are fixed-rate loans, which help it mitigate some of the burden of higher interest rates.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data center REIT with a portfolio of 23 data centers in nine countries.
Its assets under management amounted to S$3.7 billion as of 31 December 2023.
In 2023, the REIT’s financial position was rather poor as one of its tenants, Bluesea, was in arrears.
Although gross revenue increased 1.4% year-on-year to S$281.2 million, NPI decreased 0.3% year-on-year to S$245 million.
The increase in financing costs caused the data centre REIT’s DPU to decline 8.1% year-on-year to S$0.09383.
Keppel DC REIT’s distribution yield was 5.5%.
Although the DPU was lower, the REIT maintained an impressive occupancy rate of 98.3% and a long portfolio-weighted average lease term of 7.6 years.
With total debt of just 37.4% and about S$2 billion in potential acquisition value, investors can look forward to possible DPU-enhancing acquisitions soon.
In our latest report, we look at five outstanding Singapore REITs offering distribution yields above 5.5%. Why settle for less? Get more dividends in your bank account with our REITs guide. Click here to download it for free now.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust, Frasers Logistics & Commercial Trust and Keppel DC REIT.
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