3 High-Yielding Singapore REITs to Add to Your Watchlist

High yield REITs

Tim Phillips

June 23, 2022

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In uncertain times for investors, like the ones we currently find ourselves in, it may be best to focus on buying into dividend stocks.

That’s because as inflation starts to bite, and a prolonged bear market looks likely, investors should focus on dividend-paying stocks.

Mainly, that’s because dividend stocks (if chosen astutely) can provide predictable streams of income, no matter what the economic environment we find ourselves in.

In Singapore, the most obvious option is to look towards real estate investment trusts (REITs). Within the universe here, there are lots of options for dividend investors.

So, for those looking for passive income on a regular basis, here are three high-yielding Singapore REITs (S-REITs) that investors can add to their watchlists.

1. Manulife US REIT

For investors in Singapore, Manulife US Real Estate Investment Trust (SGX: BTOU) offers them a pure-play way to get exposure to US commercial (in other words, office) property.

The REIT first listed shares in Singapore in May of 2016 and it has 12 office properties in the US with a total net lettable area of 5.4 million square feet.

These properties are located across various states, including Arizona, California, Georgia, New Jersey, Oregon, Virginia, and Washington D.C.

Manulife US REIT’s latest earnings, for the first quarter of 2022, showed that its portfolio have an overall occupancy rate of 91.7%.

The REIT did mention that for every 1% hike in US interest rates, there would be a negative impact to distribution per unit (DPU) of 0.075 US cents (see below).

Manulife US REIT gearing

Source: Manulife US REIT Q1 2022 business update slides

While above the US grade A property average of 83%, it was perhaps a sign of the struggles that commercial property landlords are encountering as the global economy emerges from the Covid-19 pandemic.

The problems posed by the Covid-19 pandemic, when the US economy went into lockdown, has led the REIT to cut its DPU over the past two financial years.

Elsewhere, there were some positive data in its leasing activity – which saw it lease out 68,000 square feet of new space during the period with a positive rental reversion rate of +3.9%.

At its current unit price of US$0.58, and based off its FY2021 DPU of 5.33 US cents, Manulife US REIT shares are giving investors a dividend yield of 9.2%.

2. Lendlease Global Commercial REIT

Up next on the high-yielding list is Lendlease Global Commercial REIT (SGX: JYEU), which owns three properties; [email protected] and Jem in Singapore as well as the Sky Complex in Milan, Italy.

Despite its limited portfolio, the REIT’s latest Q3 FY2022 update (for the three months ending 31 March 2022) highlight the strengths of its properties.

The REIT maintained an impressively-high occupancy rate of 99.9% as of the end of the quarter and its recent acquisition of Jem has more than doubled its assets under management (AUM) to nearly S$3.5 billion.

Lendlease’s average cost of debt also remains low, at just 0.98%, while its gearing ratio of 40.7% (post-the-Jem acquisition) still leaves it with plenty of debt headroom.

The Jem acquisition also allows the REIT to diversify its tenant concentration risk, with its Sky Complex in Milan being 100%-leased to Sky Italia, a large cable television network.

With a H1 FY2022 DPU of 2.4 Singapore cents, Lendlease REIT is offering dividend investors a robust 12-month forward dividend yield of 6.2%.

3. Sasseur REIT

Finally, rounding out the top three high-yielding REITs is China-focused shopping outlet mall operator Sasseur REIT (SGX: CRPU).

The REIT owns four premium outlet malls in China. Two of these are in Chongqing, one in Hefei, and one in Kunming.

It has been a consistent dividend payer since first listing in 2018 and – uniquely for a Singapore-listed stock – is one of the few REITs here that pays its dividend on a quarterly basis.

While the REIT’s weighted average lease expiry (WALE) is relatively short, at just 2.6 years as of its latest quarter, it has seen its portfolio occupancy rate edge higher to 95.4%.

Its exceptionally low gearing ratio – at just 26.2% – also means that Sasseur REIT has plenty of optionality in terms of adding to its portfolio.

A strong interest coverage ratio (ICR) of 5.1 times gives its debt profile an added layer of security.

With its latest quarterly DPU of 1.822 Singapore cents, Sasseur REIT units are giving investors a solid 12-month forward dividend yield of 9.6%.

Sticking with dividends amid volatility

Dividend investors should be pleased at the many options that they have to choose from in Singapore’s stock market.

If the global economy does indeed enter a recession, it’s likely that REITs will hold up relatively better versus other asset classes given their regular income streams.

While investors should closely monitor their individual holdings, dividend investors would be remiss not to add Manulife US REIT, Lendlease Global Commercial REIT and Sasseur REIT to their watchlists in the coming months.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.