3 Top Industrial S-REITs Yielding 5.5% or More

September 4, 2023

Singapore industrial REIT

Interest rates in the US look to be peaking given falling inflation numbers and jobs data that suggest hiring is slowing.

So, for investors here in Singapore, it begs the question of whether Singapore REITs are now worth looking at given interest rates have stabilised somewhat.

Singapore REITs have held up quite well so far in 2023 and if the stock market is right (in thinking that interest rates get cut in 2024) then it could be an opportune time to buy into REITs.

However, we should be looking at quality S-REITs that continue to hold up even if rates stay elevated. One of the areas of interest for dividend investors is industrial REITs listed on the SGX.

That’s because many have strong structural growth tailwinds in place and are offering up attractive dividend yields.

So, here are three top industrial Singapore REITs that are yielding over 6% that income investors can consider.

1. Frasers Logistics & Commercial Trust – Dividend yield = 6%

The Europe- and Australia-focused Frasers Logistics & Commercial Trust (SGX: BUOU) owns 107 logistics & industrial (L&I) as well as commercial properties.

Valued at a total of S$6.9 billion, 99 of these properties are in the L&I segment meaning the REIT is primarily focused in the industrial space.

Frasers Logistics & Commercial Trust, also known as FLCT, saw an overall positive rental reversions of +9.8% (on an incoming vs outgoing basis) in Q3 FY2023 (for the three months ended 30 June 2023).

It has a low gearing ratio of just 28.6% and its cost of borrowing is also relatively low at just 2.0%. Its low gearing means the REIT has debt headroom of around S$3 billion to make accretive acquisitions if it wants.

At its current share price, FLCT shares are offering investors a 12-month forward dividend yield of 6%.

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.

2. Mapletree Industrial Trust – Dividend yield = 5.9%

With a more Singapore- and North America-focused portfolio is Mapletree Industrial Trust (SGX: ME8U).

The REIT owns 141 properties across six property segments, with the majority of its assets under management (AUM) actually in data centres.

Its overall AUM is fairly evenly split (around 50:50) between Singapore and North America. All its North American properties are data centres.

However, what’s made the Mapletree Industrial REIT stand out in recent months is its decision to enter the Japanese data centre market with its maiden acquisition in the country.

The proposed property is 100%-leased to an established data centre operator for 20 years and the REIT expects the deal to close in Q3 2023.

Mapletree Industrial Trust’s gearing ratio has gone up slightly – to 38.2% as of 30 June 2023 – but it’s still well below the 50% cap that the MAS imposes on S-REITs.

Given shares are down over the past year, the fact that its 12-month forward dividend yield is 5.9%.

3. CapitaLand India Trust – Dividend yield = 5.7%

Finally, we have CapitaLand India Trust (SGX: CY6U) is a India play as all its properties are located in Asia’s third-largest economy.

The REIT owns nine IT business parks, one logistics park, one industrial facility, and four data centres in India across Bangalore, Chennai, Hyderabad, Pune, and Mumbai.

While its net property income (NPI) for H1 2023 was up 3% year-on-year to S$85.6 million, its distribution per unit (DPU) dropped 22% year-on-year to 3.36 Singapore cents as its preferential offering earlier this year diluted unitholders.

Over the period, depreciation of the Indian rupee also didn’t help the REIT’s numbers. However, on the whole, the REIT is continuing to grow its portfolio via property rejuvenations.

The redevelopment of ITPH looks to increase the leasable area by 3.8x and the completion of Block A in January 2023 – which is already 100% committed – helped contribute to a 14% valuation uplift in ITPH.

At its current share price, CapitaLand India Trust is offering income investors a 12-month forward dividend yield of 5.7%.

Looking for industrial yield from Singapore REITs

As interest rates in the US look to be peaking out, it’s certainly worth looking into the industrial space of Singapore’s REITs.

With Frasers Logistics & Commercial Trust, Mapletree Industrial Trust, and CapitaLand India Trust, dividend investors in Singapore can tap into passive income streams from global property.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of CapitaLand India Trust.

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.

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