Singapore REITs have a special place in all dividend investors’ heart.
Imagine: getting dividend income year after year, is a great way to grow your portfolio.
And it’s hard to go wrong buying Singapore properties.
What you want is make sure you’re paying the right price.
Here’s 3 big, safe Singapore REITs that are paying at least 5% dividend yield right now.
Singapore REIT #1: CapitaLand Integrated Commercial Trust
CapitaLand Integrated Commercial Trust (SGX:C38U) is the granddaddy of Singapore REITs. It’s the merger between CapitaLand Mall Trust (the first Singapore REIT listed in 2002) and CapitaLand Commercial Trust.
Today, CICT owns both retail and office assets. And is the biggest Singapore REIT with a market cap of S$14 billion.
CICT owns 22 Singapore properties — including Tampines Mall, IMM Building, Junction 8, Raffles City and the latest revamped Funan Mall.
What struck me about CICT is their retail properties aren’t high-end luxury malls. CICT either owns heartland, or centralized shopping malls.
That’s why many of their retail malls have a high occupancy rate. Even during the COVID pandemic.
CICT is good at enhancing their retail malls. In 2012, they turned Funan Mall from a traditional consumer electronics retailer to a lifestyle hub to attract the younger crowd.
And CICT is beefing up its office assets and bringing in more integrated malls into its portfolio. In fact, its five office buildings have average rents higher than the market rent in the CBD area.
Integrated malls combine both retail and office spaces.
Source: CICT 1H2021 results presentation
In its latest results, CICT produced about S$335 million of distributable income. This means that divided by the total number of units, CICT pays to unitholders about 5.18 cents per unit. This was much higher than what it had last year.
This was despite CICT granted S$18.9 million of rent waivers for tenants affected by the pandemic.
Over the last decade, CapitaLand Mall Trust paid an average dividends of S$0.10 per unit. After the merger, this should increase as CICT will get more from office buildings under CapitaLand Commercial Trust.
Today, CICT shares trade at an average S$2.10 per share. At the highest, it traded at S$2.65 per share. Over the last 12 months, CICT paid out a total of 10.91 cents per unit. At today’s share price of S$2.10 per share, the stock is trading at a 5.1% dividend yield.
This makes a good entry-level Singapore REIT to buy, especially for investors who want to start growing their dividends.
Source: ShareInvestor Webpro, Dividend Titan
I’d say after the merger, this is one of the safest Singapore REITs.
CICT knows e-commerce disruption is here. And it’s actively getting more F&B tenants to replace tenants that are affected by online retail. Office assets also help mitigate e-commerce disruptions.
Singapore REIT #2: Keppel REIT
Here’s the one thing I like about Keppel REIT (SGX:K71U) the most — its shares trade almost like a bond. It’s rock-solid.
And why it hardly bounces up and down so much is because Keppel REIT owns some of the most prized grade-A offices in Singapore — Ocean Financial Centre, Marina Bay Financial Centre, One Raffles Quay and Keppel Bay Tower — and Australia.
Source: Yahoo! Finance, Dividend Titan
And this means, its stream of dividends are almost “risk-free”.
At market cap of S$4 billion, Keppel REIT is Singapore’s biggest “pure-play” office REITs.
Grade-A offices have one key competitive advantage — appeal. You don’t have to worry about a lack of tenants, because big banks, technology firms, commodity giants all want to have their fancy offices in the CBD area.
Today, Keppel REIT owns 10 office properties across Singapore, Australia and South Korea. It recently bought a new Australia property — and has some of the most stable tenants — State of Victoria, DBS Group, Government of Western Australia, Keppel Group.
Once these tenants occupy a space, they usually stay there for a very long time.
Source: Keppel REIT 1H2021 Results Presentation
Lately, Keppel REIT had a portfolio rebalancing.
They sold off an office building in 275 George Street in Brisbane, bought Keppel Bay Tower in Harbourfront Singapore and last year, bought Victoria Police Centre in Melbourne and Pinnacle Office Park in Sydney.
In its latest first half financial year results, its distributable income grew 11.5% to S$105 million, as compared to last year. This was mainly due to new rental income from Victoria Police Centre in Australia, Melbourne and Pinnacle Office Pak in Sydney.
Today, its share are trading at a 21% discount to Keppel REIT’s book value, which means the market is taking a big discount.
Keppel REIT started paying more often in 2013. It now pays a quarterly distribution dividend rate. In fact, through the pandemic, Keppel REIT raised its dividends. During the first half of 2021, Keppel REIT paid 2.94 cents per unit, higher than its was in the first half of 2020.
Since its IPO in 2006, it grew dividends from 4.63 cents per unit to 5.73 cents per unit.
Over the last 12 months, Keppel REIT paid a total 5.87 cents per unit dividends. At current share price of S$1.08, that’s a dividend yield of 5.4%.This is another a good entry-level Singapore REIT to buy, especially for investors who want to start growing their dividends.
Singapore REIT #3: Mapletree North Asia Commercial Trust (MNACT)
Mapletree NorthAsia Commercial Trust (SGX:RW0U) trades at a huge discount from its peak in 2019. Back then, shares were at S$1.46 per share. Today, it trades at S$0.985 per share.
Singapore REITs shares tend not to trade widely. This makes MNACT worth a second look.
You might not know this Singapore REIT much. Unlike Keppel REIT, MNACT’s assets are located in Greater China — Beijing, Hong Kong and Shanghai.
MNACT was listed in 2013. Today, its market cap stands at S$3.4 billion.
Festival Walk is one of the “best-in-class” shopping malls owned by MNACT. it’s located right in the heart of Kowloon Tong, Hong Kong, which is still close to full occupancy since 1998. This is despite the COVID pandemic last year. This is also because Festival Walk has high-quality tenants — Apple, H&M, Starbucks and Uniqlo in the mall. What’s more MNACT is turning Festival Walk into a lifestyle mall. For example, placing an ice rink right in the middle of the shopping mall.
Festival Walk’s retail sales and foot traffic continued to grow since the start of this year. And this shopping mall contributes 49% of MNACT’s revenues — the biggest shopping mall contributor in this Singapore REIT.
Source: MNACT Results Presentation
Its next largest property in the portfolio is Gateway Plaza (GW). This grade-A office building in Beijing grew net property income by 4.5% during the latest quarter.
This was despite the fact that it has only 93% occupancy rate and rents fell by 27% because of the pandemic.
In its latest financial results, MNACT’s first quarter results net property income was 14% higher as compared to last year.
There were lower rental relief grants, growing footfall and retail sales. On average, its malls are close to full occupancy.
But overall, this Singapore REIT’s dividend performance is still pretty strong.
Dividends have grown steadily, from an increase in property assets and rising rental rates since its IPO.
MNACT grew its dividends from 6.2 cents per unit in 2014 to 7.1 cents per unit in 2020. Even with the COVID pandemic, its distribution fell slightly to 6.1 cents per unit.
To me, I don’t think it’s a huge cause for concern. As vaccination rates increase, and the pandemic gets under controlled, MNACT properties will see a rebound in rents.
Why hasn’t MNACT rebound from its peak? Two things.
First, its the Hong Kong protest back in 2019 forced retail and offices to shut down for awhile.
Second, the ongoing pandemic crisis. Both events have led to MNACT suffering from a share price. As a result, shares have been in a sustained downtrend since then.
Source: ShareInvestor Webpro, Dividend Titan
But its properties fundamentals are still intact.
MNACT shares peaked in S$1.46 in July 2019. Today shares are trading at S$0.99 per unit. Over the last 12 months, MNACT paid dividends of 6.2 cents per dividend.
That puts dividend yield the highest among the 3 big Singapore REITs here at 6.2% dividend yield. In my opinion, this is another a good entry-level Singapore REIT to buy, especially for investors who want to start growing their dividends.
Sometimes investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan
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Thanks for the 3 laggard property REITS. Stock code of Mapletree NorthAsia Commercial Trust (SGX:RW09) should be RW0U.
Hi Freddie,
Thanks for the heads up! I’ve changed it 🙂
Willie
Hi, wouldn’t Festival Walk pose a concentration risk to MNACT? Would appreciate your opinion on this important point
Hi Tan!
Yup, there’s concentration risk to MNACT. What I look beyond is FW’s favorable location. In its latest results, FW is 99.9% occupied, and experienced a quick rebound in footfall (+29.9% y/y) and retail sales (+22% y/y) from last year. If I’m buying MNACT, I think of FW as an addition to my portfolio of Singapore REITs (alongside other properties). In that sense, it’s diversified across my portfolio.
Hope this helps!
Willie