It’s been a difficult 2022 so far for investors. The sea of red in global stock markets has been caused by a combination of higher inflation and fast-rising interest rates.
One area to be particularly hard hit has been REITs, as the global outlook has changed and the cost of capital has increased. Dividend payouts by REITs have also been impacted.
However, at the end of the day Singapore REITs are generally well managed with conservative debt ratios.
While distribution per unit (DPU) for many REITs may be cut over the coming quarters, there are still a host of rock-solid REITs listed in Singapore.
So, without any further ado, here are three top Singapore REITs that investors can consider buying now and holding for the long term.
1. Mapletree Pan Asia Commercial Trust
First up is the heavyweight commercial and retail REIT Mapletree Pan Asia Commercial Trust (SGX: N2IU), also known as MPACT.
With commercial and retail properties that span Singapore, Hong Kong, China, South Korea, and Japan, the REIT’s share price is down around 12% so far in 2022.
The REIT posted some impressive figures for its H1 FY2022/2023 period (for the six months ending 30 September 2022) as the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust was completed.
Its overall portfolio occupancy held up well, although it did fall marginally to 96.9% as of 30 September 2022, versus the 97.2% occupancy rate as of 30 June 2022.
Overall, though, MPACT is still a Singapore-centric story, as nearly four-fifths of both its revenue and net property income (NPI) comes from Mapletree Business City and VivoCity (see below).
Source: Mapletree Pan Asia Commercial Trust H1 FY2022/2023 earnings presentation
Having said that, the REIT is exposed to both the continued Singapore reopening as well as the potential full reopening of Hong Kong (via Festival Walk).
MPACT announced a distribution per unit (DPU) of 4.94 Singapore cents, up 12.5% year-on-year. The REIT also announced it would revert to paying its dividend quarterly from Q3 FY2022/2023.
At its current price, MPACT shares are offering investors a 12-month forward dividend yield of 5.7%.
2. Frasers Centrepoint Trust
For those of us who think Singapore will likely continue to do well should think about buying Frasers Centrepoint Trust (SGX: J69U).
The REIT is focused on Singapore’s retail scene via its many heartland-located suburban malls.
Occupancy rates were solid across its portfolio, with an overall committed occupancy rate of 97.5% across its retail properties.
Indeed, five of the nine retail malls it owns saw occupancy rates of above 99%. Rental reversions were positive for the period, while tenant sales averaged 10% above pre-COVID levels for FY2022.
With solid gearing of only 33.0% as of 30 September 2022, the REIT also has the headroom for accretive acquisitions.
Based on its full-year FY2022 DPU of 12.227 Singapore cents, Frasers Centrepoint Trust offers investors a dividend yield of 6.0%.
3. CapitaLand Ascott Trust
While technically not a REIT, but a trust, CapitaLand Ascott Trust (SGX: HMN) has established itself as one of the leading hospitality trusts in the Asia-Pacific region.
With 95 properties across 15 countries – worth a total of S$7.6 billion as of 30 June 2022 – CapitaLand Ascott Trust has a diversified geographic mix as well.
Just over 60% of its total portfolio value lies in Asia Pacific with 21% in the US and the remainder in Europe.
The trust gave a brief business update to investors for its Q3 FY2022 quarter, stating that Q3 2022 gross profit had recovered to around 90% of its pre-COVID levels.
This was boosted by contributions from eight new properties and 88% year-on-year jump in portfolio revenue per average user (RevPAU).
Management estimates that around 56% of its gross profit during the quarter came from stable sources, such as long-stay properties, purpose-built student accommodation (PBSA), master leases, and management contracts with minimum guaranteed income (MCMGI).
Based on its H1 2022 distribution per stapled security (DPS) of 2.33 Singapore cents, CapitaLand Ascott Trust offers dividend investors as 12-month forward yield of 4.9%.
Weighing up the long-term rewards from REITs
While a lot of REITs have seen their unit prices fall so far in 2022, they can still offer investors a reliable income stream.
Mapletree Pan Asia Commercial Trust, Frasers Centrepoint Trust, and CapitaLand Ascott Trust give investors three interesting ways to both gain exposure to real estate and ride the reopening theme in Asia and around the world.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.
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.