5 Top Singapore REITs to Buy in 2023

Singapore best REITs

Tim Phillips

December 15, 2022

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Singapore’s REITs have had an extremely tough 2022 as rising interest rates in the US and higher inflation have hit unit prices.

That said, dividend investors in Singapore REITs may be seeing more opportunities emerge. That’s particularly true if you take a long-term view to investing in REITs.

While interest rate hikes no doubt impact the stock market, the Fed looks like it will start slowing the pace of hikes in 2023.

That could be great news for REITs, which have seen their cost of capital rise and have also had to cut their dividends.

So, for investors here looking for passive dividend income in the years ahead, here are five top Singapore REITs to consider buying and holding in 2023.

1. Mapletree Logistics Trust

Asia-focused logistics REIT Mapletree Logistics Trust (SGX: M44U) has seen 186 properties across Singapore, Malaysia, Japan, South Korea, Mainland China, Hong Kong, Vietnam, India, and Australia.

Its unit price is down around 13% so far in 2022 and, like all REITs, has suffered from the rising cost of capital.

While its latest distribution per unit (DPU) was up 3.5% year-on-year to 2.248 Singapore cents in its most recent quarter (Q2 FY2022/2023), this figure was actually down by 0.9% quarter-on-quarter.

However, with China’s opening up and the recent weaking of the US dollar (versus other Asian currencies), Mapletree Logistics Trust could see headwinds turn into tailwinds in 2023.

Mapletree Logistics Trust shares are currently giving investors a 12-month forward dividend yield of 5.5%.

2. CapitaLand Ascendas REIT

Second up we have logistics and industrial player CapitaLand Ascendas REIT (SGX: A17U), the largest industrial REIT listed on the Singapore Exchange (SGX).

During its latest quarter (Q3 FY2022), CapitaLand Ascendas REIT’s rental reversion remained solidly in positive territory at +5.4%.

That means it’s being able to charge its tenants more for their leases when they come up for renewal.

It also has a healthy balance sheet and a well spread out debt maturity profile, with a variety of funding sources (see below).

CapitaLand Ascendas REIT debt maturity

Source: CapitaLand Ascendas REIT Q3 FY2022 earnings presentation

Based on its H1 FY2022 DPU of 7.873 Singapore cents, CapitaLand Ascendas REIT offers dividend a 12-month forward distribution yield 5.7%.

3. Mapletree Pan Asia Commercial Trust

The commercial and retail REIT Mapletree Pan Asia Commercial Trust (SGX: N2IU) has had a relatively solid 2022 so far, when compared to other REITs in Singapore.

But that solid showing has been on the business side of things as its share price is actually down nearly 15% so far this year.

The REIT has a host of commercial and retail properties across Singapore, Hong Kong, Mainland China, Japan, and South Korea.

However, it’s biggest contributors to its revenue and net property income (NPI) are VivoCity and Mapletree Business City – which have seen strong numbers since Singapore’s economy reopened.

Now, with China and Hong Kong starting to reopen, Mapletree Pan Asia Commercial Trust’s properties there – particularly Festival Walk – could start to turn the corner in 2023.

With a H1 FY22/23 DPU of 4.94 Singapore cents, the REIT’s offering investors a 12-month forward dividend yield of 5.9%.

4. Keppel DC REIT

Similar to technology and growth stocks being out of favour in 2022, Keppel DC REIT (SGX: AJBU) has not been shown any love from investors this year.

Yet, the REIT continues to have a strong portfolio of data centre assets that continue to be in demand, and will likely continue to be so in the years ahead.

In its latest Q3 2022 earnings, Keppel DC REIT saw its distributable income rise 9% year-on-year to S$46.9 million while its Q3 2022 DPU of 2.585 Singapore cents was up 5% year-on-year.

The higher distributable income was due to contributions from acquisitions of its Guangdong Data Centre 1, 2 & 3 as well as asset enhancement initiatives (AEIs) and income escalations.

Keppel DC REIT’s portfolio occupancy (as of 30 September 2022) also strengthened to 98.6%, up from 98.2% at the end of June 2022.

With continued demand for data centre space in Europe and Asia, Keppel DC REIT looks likely to continue to benefit from these tailwinds.

Based on its Q3 2022 DPU, Keppel DC REIT units are offering a 12-month forward dividend yield of 5.6%.

5. Sasseur REIT

Finally, we have China-focused outlet mall operator Sasseur REIT (SGX: CRPU). The REIT owns four premium outlet malls in China; two in Chongqing, one in Hefei, and one in Kunming.

Naturally, it looks set to be a winner from the reopening of the Chinese economy. Regardless, its recent business performance has been strong.

In its latest Q3 2022 earnings, Sasseur REIT raised its DPU by 0.4% year-on-year to 1.838 Singapore cents.

Sasseur REIT is also one of the few REITs in Singapore to pay a quarterly dividend.

With an attractive 12-month forward dividend yield of 9.7%, the REIT offers investors both quarterly payouts and the potential to benefit from the reopening theme in China.

Looking to Singapore REITs in 2023

Singapore’s REITs have been broadly rejected by investors in 2022 although that may change as the US Federal Reserve starts to slow the pace of interest rate hikes.

With that in mind, Mapletree Logistics Trust, CapitaLand Ascendas REIT, Mapletree Pan Asia Commercial Trust, Keppel DC REIT and Sasseur REIT are five top S-REITs that dividend investors can consider buying in 2023.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Mapletree Logistics Trust.

About the Author: Tim Phillips

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.