To The Moon

The Central Provident Fund (CPF) scheme is an excellent way to build up your savings for retirement.

Moreover, the CPF Ordinary Account (OA) balance earns a near risk-free interest rate of 2.5% on balances there, with an additional 1% paid out for balances up to S$20,000.

However, with core inflation rising to near 14-year highs of 5.1% in October, it’s necessary to make your money work harder for you.

REITs are one asset class you can deploy your savings that pay regular and dependable dividends.

And with an economic downturn looming, some of these REITs can also offer a safe harbour to weather the storm.

Here are four resilient Singapore REITs with strong sponsors and distribution yields that are higher than the CPF OA interest rate.

Mapletree Logistics Trust

Mapletree Logistics Trust, or MLT, owns a portfolio of 186 properties across eight countries with total assets under management (AUM) of S$12.9 billion as of 30 September 2022.

The REIT is helmed by Temasek-owned Mapletree Investments Pte Ltd as its sponsor.

For its fiscal 2023’s first half (1H2023), the logistics REIT reported a 13% year on year increase in gross revenue to S$371.5 million, lifted by higher revenue from existing properties and accretive acquisitions.

Net property income (NPI) rose 12% year on year to S$323.2 million, while distribution per unit (DPU) edged up 4.2% year on year to S$0.04516.

MLT’s trailing 12-month distribution yield stands at 5.5%.

The REIT maintained a high portfolio occupancy rate of 96.4% with an average positive rental reversion of 3.5% for its latest quarter.

With an aggregate leverage of 37%, MLT has room to tap on debt for further yield-accretive acquisitions.

The REIT has also hedged 82% of its debt on fixed rates to guard against a sharp rise in finance costs.

Keppel DC REIT

Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres in nine countries worth S$3.6 billion as of 30 September 2022.

The REIT has a strong sponsor in blue-chip conglomerate Keppel Corporation Limited (SGX: BN4), which has more than S$2 billion worth of potential data centre assets that can be injected into the REIT.

Keppel DC REIT reported a respectable set of results for the first nine months of 2022 (9M2022).

Gross revenue inched up 0.7% year on year to S$205.9 million while NPI dipped 0.2% year on year to S$187.3 million.

DPU, however, improved by 3.4% year on year to S$0.07634 for 9M2022 because of a big jump in finance income from Keppel DC REIT’s investment in M1’s bonds and preference shares.

The REIT’s trailing 12-month distribution yield comes in at 5.5%.

CapitaLand Integrated Commercial Trust

CapitaLand Integrated Commercial Trust, or CICT, is a retail cum commercial REIT that owns 21 properties in Singapore, two in Germany, and three in Australia.

Total AUM stood at S$24.2 billion as of 31 December 2021.

CICT has a strong sponsor in property giant CapitaLand Investment Limited (SGX: 9CI).

The REIT reported a slight increase in its DPU for 1H2022, going from S$0.0518 to S$0.0522.

The trailing 12-month DPU came in at S$0.1044, giving the REIT’s units a trailing distribution yield of 5.1%.

CICT”s latest business update was encouraging, with 9M2022 gross revenue rising 8.9% year on year and NPI climbing by 8.4% year on year.

The REIT also has a low cost of debt at 2.5% with 80% of its loans on fixed rates, thus buffering against rising interest rates.

Frasers Logistics & Commercial Trust

Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 105 industrial and commercial properties in five countries with an AUM of S$6.7 billion as of 30 September 2022 (FY2022).

The REIT reported a downbeat set of earnings for FY2022, with revenue dipping by 4.1% year on year to S$450.2 million.

NPI fell by 3.7% year on year to S$342.1 million while DPU slipped by 0.8% year on year to S$0.0762.

FLCT’s units offer a trailing distribution yield of 6.5%.

That said, the REIT has a reputable sponsor in property developer Frasers Property Limited (SGX: TQ5).

It also boasts a high occupancy rate of 96.4% with a fairly well-spread-out lease expiry profile and adequate tenant diversification.

FLCT’s largest tenant takes up just 5% of its total gross rental income.

Furthermore, the REIT’s gearing level remains low at just 27.4%, providing it with a debt headroom of S$3.2 billion to conduct acquisitions to boost DPU.

Close to 82% of its debt is also locked into fixed rates, thereby protecting its distributable income from sharp downward falls.