Even in the face of challenges such as inflation and significant interest rate increases, S-REITs managed to maintain an average dividend yield higher than benchmarks like the Straits Times Index (STI) and traditional fixed-income instruments like Singapore Savings Bonds, fixed deposits, and savings accounts.
Why invest in Singapore REITs?
Investing in Singapore REITs (Real Estate Investment Trusts) can be a wise choice for several reasons:
- High dividend yields: Singapore REITs are known for their high dividend yields, which are typically above the average for stocks and other asset classes. This is because Singapore REITs are required to distribute at least 90% of their taxable income to shareholders each year.
- Stable income: REITs generate income from rent payments, which are typically long-term and contracted in advance. This makes REITs a good source of stable income for investors.
- Liquidity: Singapore REITs are listed on the Singapore Exchange, which means that they are highly liquid and can be easily bought and sold.
- Diversification: Singapore REITs offer investors a way to diversify their portfolios by investing in real estate without having to buy and manage physical properties themselves.
- Transparency: Singapore REITs are subject to strict regulations and are required to disclose a high level of financial information to the public. This makes them a relatively transparent asset class.
In addition to these general reasons, there are also some specific reasons why investors might choose to invest in Singapore REITs now. The Singapore economy is expected to grow at a moderate pace in the coming years, which should support demand for real estate. Additionally, the Singapore government is investing heavily in infrastructure, which should also boost economic growth.
If you're considering investing in Singapore REITs in 2023, we have shortlisted 3 S-REITs to consider. However, before diving into specific recommendations, let's explore criteria for identifying strong REITs, providing you with valuable insights when evaluating your investment options.
- Keppel DC REIT (SGX: AJBU)
- Frasers Logistics & Commercial Trust (SGX: BUOU)
- CapitaLand Ascott Trust (SGX: HMN)
DPU stands for “Distribution Per Unit”, which is the amount of dividend a REIT investor would receive for each share.
Keppel DC REIT
Keppel DC REIT is a data centre REIT with a portfolio of 25 data centres across eight countries in Asia Pacific and Europe. The company has benefited from the strong demand for data centre space driven by the growth of the digital economy. Data centres are essential infrastructure for the digital economy, which is growing rapidly. Keppel DC REIT's data centres are located in key markets with strong demand, such as Singapore, Hong Kong, and Australia.
Keppel DC REIT’s revenue and net income have grown steadily over the past few years. In the first half of 2023, Keppel DC REIT's revenue grew by 10.1% year-on-year to S$488.6 million, and its net income grew by 13.3% year-on-year to S$286.8 million. Keppel DC REIT has a healthy balance sheet with a gearing ratio of 33.8% The company also has a strong track record of dividend growth. Keppel DC REIT's dividend per unit has grown by an average of 5.7% per year over the past five years.
Frasers Logistics & Commercial Trust
Frasers Logistics & Commercial Trust is an industrial and commercial REIT with a portfolio of 132 properties across nine countries in Asia Pacific and Europe. The company has benefited from the strong demand for logistics and warehouse space driven by the growth of e-commerce. E-commerce is growing rapidly, and this is driving demand for logistics and warehouse space. Frasers Logistics & Commercial Trust's properties are located in key markets with strong demand, such as Singapore, Australia, and China.
Frasers Logistics & Commercial Trust has a strong financial performance. The company's revenue and net income have grown steadily over the past few years. In the first half of 2023, Frasers Logistics & Commercial Trust's revenue grew by 12.3% year-on-year to S$739.2 million, and its net income grew by 14.8% year-on-year to S$433.1 million. Frasers Logistics & Commercial Trust has a healthy balance sheet with a gearing ratio of 36.3%. The company also has a strong track record of dividend growth. Frasers Logistics & Commercial Trust's dividend per unit has grown by an average of 6.3% per year over the past five years.
CapitaLand Ascott Trust
CapitaLand Ascott Trust is a hospitality REIT with a portfolio of over 200 serviced residences and hotels across 30 countries. The company has benefited from the recovery of the travel and tourism industry. The travel and tourism industry is recovering from the COVID-19 pandemic, and this is driving demand for serviced residences and hotels. CapitaLand Ascott Trust's serviced residences and hotels are located in key markets with strong demand, such as Singapore, Australia, and Europe.
CapitaLand Ascott Trust’s revenue and net income have grown steadily over the past few years. In the first half of 2023, CapitaLand Ascott Trust's revenue grew by 15.3% year-on-year to S$751.1 million, and its net income grew by 17.8% year-on-year to S$449.1 million. CapitaLand Ascott Trust has a healthy balance sheet with a gearing ratio of 35.5%. The company also has a strong track record of dividend growth. CapitaLand Ascott Trust's dividend per unit has grown by an average of 5.9% per year over the past five years.
Why are these the 3 best Singapore REITs to invest in now?
All three of these REITs are leaders in their respective sectors and have a strong track record of financial performance and dividend growth. They also have a well-diversified portfolio of assets across different countries and asset classes, which reduces their overall risk profile.
In addition, these REITs are all well-positioned to benefit from long-term trends such as the growth of the digital economy, e-commerce, and the travel and tourism industry.
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