If you love dividends, you’d be no stranger to Singapore REITs. REITs allow you to own a portfolio of real estate property without having to handle all the administrative headaches. Plus, Singapore REITs are required by law to pay out at least 90% of their taxable income as dividends to their shareholders. This makes them very attractive investments.
However, with more than 40 S-REITs listed on the SGX, it is hard to determine the best REITs to buy.
Here, I present 3 REITs I think are the best REITs to buy in Singapore now and why. P.S. I shared how to pick the Best REITs here.
Best REITs to Buy in Singapore
| REIT | P/B | Yield | Consistent Long-Term DPU Growth | Reputable Sponsor | Stable Occupancy Rate | Geographic Diversification | Sector Tailwind | Large Market Cap |
|---|---|---|---|---|---|---|---|---|
| Mapletree Logistics Trust | 1.11x | 5.8% | ⭐⭐ | ✅ | ✅ | ⭐⭐ | ✅ | ✅ |
| ParkwayLife REIT | 1.53x | 4.1% | ⭐⭐⭐ | ✅ | ✅ | ⭐ | ✅ | ✅ |
| Frasers Centrepoint Trust | 0.97x | 5.3% | ⭐ | ✅ | ✅ | ❌ | ✅ | ✅ |
Let’s get into the details of why I think these REITs are the best to buy now:
1) Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust (MLT) is one of three listed S-REITs backed by Mapletree, regarded as one of the best sponsors for REITs in SGX. In Alvin’s research, he also found that Mapletree was the best performing sponsor in the past 10 years!
MLT has grown its DPU for at least the last 8 consecutive years, and had maintained strong occupancy levels and positive rental reversions to be able to achieve this DPU growth.
MLT’s assets span across 9 countries and regions with the top 4 countries and regions accounting for about three quarters of total asset under management and gross revenue. These locations which MLT have assets in are also considered developed which provides for stability to the portfolio.
The logistics industry has strong sector tailwind due to e-commerce penetration which is expected to continue over a long term. Additionally, MLT does have a small exposure to fast growing emerging markets such as Vietnam and India too.
MLT’s sponsor is Mapletree Investments, one of the biggest property investment company with a substantial pool of logistics and industrial assets. This means MLT has no lack of an acquisition pipeline and the REIT has a long track record of accretive acquisitions.
MLT currently has a market capitalisation of about $7.8 billion, making it one of the largest listed on the Singapore Exchange.
It last traded at $1.53 per share, valuing the REIT at a P/B of 1.09 times and providing for a yield of 5.9% to unitholders.
2) ParkwayLife REIT (SGX: C2PU)
ParkwayLife REIT (PLife REIT) listed in Aug 2007 with a Singapore centric portfolio comprising 3 hospitals and made its maiden investment into Japan in Apr 2008, first in a manufacturing and distribution facility and then into nursing homes.
The expansion into Japanese nursing homes have provided substantial returns to unitholders off the back of stable income and a demographic tailwind. PLife REIT has since grown its Japan portfolio to nearly 60 nursing homes worth more than S$700 million as at Dec 2023, after taking into account the weak Japanese yen today.
Its three Singapore Hospital asset comprising Mount Elizabeth, Gleneagles and Parkway East have established reputations as one of the best private healthcare options in Asia with a depth of expertise and state of the art technology, making PLife REIT one of the few REITs in Singapore with top tier trophy assets as a cornerstone of the portfolio.
PLife REIT has amazingly grown its recurring DPU for 16 consecutive years since its IPO. This is attributable both to increased recurring income in its assets as well as accretive acquisitions.
PLife REIT’s sponsor is IHH Healthcare (SGX: Q0F) (KLSE:IHH), a very large Hospital group that is listed in both Malaysia and Singapore which provides PLife REIT with an acquisition pipeline of Hospital assets. One much touted target is the Mount Elizabeth Novena Hospital which is an established and stable asset with stable cashflows. PLife REIT has a right of first refusal to acquire this asset should the sponsor look to dispose the asset.
PLife REIT currently has a market capitalisation of about $2.2 billion. It last traded at $3.58 per share, valuing the REIT at a P/B of 1.53 times and providing for a yield of 4.1% to unitholders.
3) Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust (FCT) is the largest suburban retail mall owners in Singapore with 10 malls valued at $6.9 billion and with approximately 10.5% market share in the suburban shopping centre space. FCT is also a pure play on the Singapore suburban retail market, considered as one of the most resilient property markets.
As a suburban mall, it is located in high population density neighbourhoods yet at the same time located in areas with low retail space per capita as compared to malls in the city centre. The malls are near residential populations with good infrastructure. Suburban malls also offer consumers a lifestyle experience and benefit from necessity spending.
From Alvin’s previous analysis, FCT owns 9 out of 86 malls connected to the MRT stations in Singapore, making it the 2nd largest key owners of these convenient suburban malls.
Frasers Centrepoint Trust grew its DPU for 13 consecutive years since its IPO up to 2019. This is attributable both to increased recurring income in its assets as well as accretive acquisition. In 2020, it took a dip due to the pandemic substantially affecting retail malls and recovered its trajectory since. FY23 was the first ever year it saw a 1% dip in its DPU, mainly because of interest expense increasing 73% YoY.
Its retail portfolio has a 99.9% occupancy with 4 of its malls having a 100% occupancy and most of its malls having more than 99% occupancy except for Central Plaza, the one underperforming mall with a 96.5% occupancy.
Tenant sales for 2023 has exceeded pre covid levels by 18% even though shopper traffic is still around 10% below pre covid levels, attesting to the spending power of the Singapore consumers in spite of inflation fears impacting spend and Singapore consumers spending overseas instead.
To further strengthen FCT’s leading position in the Singapore suburban retail market, FCT raised its effective interest in the NEX shopping mall to 50% from 25.5% by acquiring an additional interest from its sponsor. The acquisition was funded quickly by a private placement that was oversubscribed and will provide a DPU accretion of at least 1.5%. This was after the initial acquisition in January 2023.
FCT carries out asset enhancement initiatives (AEI) to keep their portfolio refreshed and at the same time increase rental prices which increases the property value. FCT’s latest major AEI is on the Tampines 1 mall’s and the newly enhanced spaces have been 97% leased by tenants, most of it which were pre committed prior to the commencement of the AEI.
FCT currently has a market capitalisation of about $3.9 billion, considered a sizeable REIT in today’s terms. It last traded at $2.25 per share, valuing the REIT at a P/B of 0.97 times and providing for a yield of 5.3% to unitholders.
Why I Think These REITs are the Best REITs to buy in Singapore now?
These 3 REITs have ticked all the boxes deemed important when it comes to picking the best REITs, as summarized again in this table:
Although Frasers Centrepoint Trust is not geographically diversified, some investors may prefer a pure Singapore portfolio due to the historical strength of Singapore assets. It also makes for a good pure play of Singapore retail malls.
(p.s. for more ideas, here’re our pick of the best blue chip REITs to buy)
Comment and let us know if you think there are other REITs that tick all theses boxes!