September 10

3 Stable REITs that offer above 5% Yields

Real Estate Investment Trusts (REITS) are structured to pass down at least 90% of the company’s taxable income to its shareholders.

As a dividend loving country, its no wonder REITS are part and parcel of many astute investors portfolio to gain a footing into the real estate sector.

There are many REITS listed on SGX and today we will not be pulling out the big guns and are instead going to focus on medium sized REITS.

Here are 3 stable REITs that are dishing out yields more than 5% that you should take note of.

Stable REIT #1 – Lendlease Global Commercial REIT

Lendlease Global Commercial REIT (“LREIT”) has a diversified portfolio used primarily for retail and/or office purposes.

Its portfolio comprises a leasehold interest in:

  • 313@somerset, a prime retail property located in Singapore
  • a freehold interest in Sky Complex, which comprises three grade-A office buildings located in Milan.
  • A stake in Jem – an integrated office and retail development (through a 5 per cent investment in Lendlease Asian Retail Investment Fund 3)

As of its latest half-yearly results, LREIT’s revenue increased by 8.5% to $37.04 million. Its net property income increased by 10% to $26.53 million.

The group’s DPU increased by 32.8% to 2.34 cents and its gearing ratio remains at an impressive 32.0%.

One of its main attraction is its 313 Somerset asset where it is situated right above the MRT, and LREIT has acquired a parking space to enhance the offerings in that area.

Moreover, under its asset is its Sky Complex in Italy where it is on a long-term leasing to Sky Italia. Sky Italia is backed by Sky which is a big parent company in UK.

LREIT last closed at $0.88 and sports a dividend yield of 5.4%. This is an approximate 4% premium to any fixed deposit rates in the Singapore market.

Stable REIT #2 – ESR REIT

As at 30 June 2021, ESR-REIT holds interest in a diversified portfolio of 58 properties located across Singapore with a total gross floor area of approximately 15.6 million square feet.

The properties are close to major transportation hubs and key industrial zones island-wide amid these business sectors:

  • Business Park
  • High-Specs Industrial
  • Logistics/Warehouse and General Industrial

ESR-REIT also holds a 10.0% interest in ESR Australia Logistics Partnership, a private fund comprising 37 predominantly freehold logistics properties all located in Australia.

As of its latest half-yearly report, ESRs revenue increased by 5.4% to $118.84 million. Its net profit turned positive as assets were revalued downwards in the previous half year.

The group’s DPU increased by 14.3% to 1.54 cents and its gearing ratio remains at comfortable 41.3%.

The exciting part of ESR is that it possess a host of logistics assets that is the shining star during the pandemic.

Moreover, ESR REIT is backed by ESR Cayman – one of the largest real estate player in Asia with assets across the whole continent.

ESR REIT has also been actively looking for opportunities to invest in overseas assets, where the strong sponsor from ESR Cayman will come in handy.

ESR REIT last closed at $0.470 and sports a dividend yield of 6.42%. This is an approximate 5% premium to any fixed deposit rates in the Singapore market.

Stable REIT #3 – Keppel REIT

Keppel REIT (KREIT) owns in a portfolio of commercial real estate assets in Singapore and pan-Asia.

The REIT has assets under management of over $8 billion in Singapore, key Australian cities and Seoul, South Korea.

As of its latest half-yearly results, KREIT’s revenue increased by 40.2% to $105.8 million. Its net profit increased by an amazing 64.5% to $116.2 million. The higher net profit is likely a result of revaluation of assets.

The group’s DPU increased by 5% to 2.94 cents and its gearing ratio remains at a good level of 38.9%.

KREIT is backed by our home grown giant Keppel, which is a renowned name not only in Singapore but whole of Asia.

Having many assets in the city central of Singapore provides KREIT with the first look on capturing all the financial companies that want to come to the financial hub. For its Australian assets, most of its principal tenants are governmental organisations, which are considered very safe tenants.

As of today’s market price, KREIT has a forward dividend yield of 5.44%. This is an approximate 4% premium to any fixed deposit rates in the Singapore market.

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Tags

dividends, esr reit, Keppel REIT, lendlease reit, reits, SGX, stable reits


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