3 Top-Performing Retail S-REITs With Dividend Yields Over 5%

July 17, 2023

Singapore is enjoying a robust resurgence of international tourism, with the city-state’s visitor arrivals skyrocketing to 1.13 million in June.

This marked the fourth month running that the number exceeded the one million mark, rebounding from a slight dip in May.

This has fuelled significant growth in the services and retail sector throughout Q2 2023, a positive windfall for retail-focused Singapore REITs (S-REITs).

As retail footfall surges, these S-REITs are primed to enjoy escalating earnings growth.

Given that we’re approaching the tail end of the interest rate hike cycle, a potential pivot toward the REITs sector is anticipated.

Bearing this in mind, I’ve looked at three high-yielding retail S-REITs, each boasting a dividend yield of 5% or more, meaning they’re ripe for investors’ attention.

1. CapitaLand Integrated Commercial Trust

CapitaLand Integrated Commercial Trust (SGX: C38U), also known as CICT, holds the title of Singapore’s premier retail and CBD office landlord.

CICT commands a portfolio of 26 premium properties scattered across Singapore, Germany, and Australia, and its asset under management (AUM) stood at an impressive S$24.2 billion as of 31 December 2022.

The trust’s unique mix of suburban and downtown properties, including coveted retail spaces in bustling shopping districts and tourist hotspots, ensures a steady stream of potential customers.

Their strategic locations near MRT stations and transport hubs promise heavy foot traffic.

At present, CICT boasts a forward distribution yield of 5.4%.

2. Mapletree Pan Asia Commercial Trust

Mapletree Pan Asia Commercial Trust (SGX: N2IU), or MPACT, owns 18 properties across Asia, from Singapore to South Korea.

Its combined net lettable area extends to 11 million square feet, valued at S$16.6 billion as of 31 March 2023.

In FY2023, MPACT reported a colossal 65.4% surge in revenue, reaching S$826.2 million.

Meanwhile, its flagship Singapore retail asset, VivoCity, is undergoing an asset enhancement initiative set to deliver an estimated return on investment exceeding 20%.

At the current level, MPACT trades at a 12-month forward distribution yield of 5.8%.

3. Frasers Centrepoint Trust

Frasers Centrepoint Trust (SGX: J69U), simply known as FCT, specialises in suburban retail spaces in Singapore, with 10 retail malls and an office property under its belt.

As of 31 March 2023, its AUM stood at S$6.9 billion.

For H1 FY2023, FCT witnessed a 6.5% year-on-year (YoY) increase in gross revenue, reaching S$187.6 million.

Retail committed occupancy peaked at an impressive 99.2% due to strong leasing demand and rental reversions.

Tim wrote about FCT as one of the retail S-REITs that investors could buy and hold forever back in June.

Currently, FCT is trading at a 12-month forward distribution yield of 5.6%.

Downside risk remains for retail S-REITs

While the strong influx of international tourists to Singapore offers a glimmer of hope, the road to full recovery for S-REITs still has some way to go.

High interest rates could continue to suppress DPU growth until 2024.

However, as the interest rate hike cycle draws to a close, high-yielding retail S-REITs such as these, offering an enticing yield of 5% or more, should pique the interest of savvy dividend investors.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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