3 REITS That Have More Than 8% Yield Right Now
- Original Post from The Motley Fool Sg

Real estate investment trusts, or REITs, are popular investment choices on the Singapore stock market. That’s because REITs tend to have high distribution yields due to their need to distribute at least 90% of their taxable income to unitholders in order to enjoy tax transparency.

In this article, I will share with you three REITs that are trading at high distribution yields of more than 8%.

Source: SGX StockFacts

We will start with Cache Logistics Trust (SGX: K2LU).As a quick background, Cache Logistics Trust is a real estate investment trust that focuses on logistics properties. It currently has 27 logistics warehouse properties in its portfolio which are located in Singapore, Australia, and China.

In the quarter ended 30 September 2018, Cache Logistics Trust reported that gross revenue grew 14.8% to S$31.5 million while net property income increased by 8.1% to S$23.1 million. The improvement was driven by higher contribution from existing properties and latest acquisitions. Yet, the REIT’s distribution per unit (DPU) was down by 4.3% year-on-year to 1.475 cents, mainly due to lower income for distribution and issue of new units.

As of 30 September 2018, the REIT’s gearing stood at 35.6% and its committed occupancy rate was 96.9%.

Next, we have First Real Estate Investment Trust (SGX: AW9U).As a quick introduction, First REIT is a healthcare-focused REIT with a portfolio of 20 properties (16 in Indonesia, three in Singapore, and one in South Korea). The REIT’s sponsor is Indonesia’s largest listed property company, PT Lippo Karawaci Tbk.

For the quarter ended 30 September 2018, First REIT reported that gross revenue climbed 5.1% while NPI improved 5.4%, respectively, as compared to the same period last year. The improvement was primarily due to contributions from the newly-acquired Siloam Hospitals Buton & Lippo Plaza Buton, and Siloam Hospitals Yogyakarta, as well as increased rental income from existing properties. Consequently, the REIT’s DPU came in at 2.15 cents, 0.5% higher than the same period last year.

Victor Tan, chief executive of First REIT’s manager, made the following comments:

“Contributions from our latest acquisitions and existing properties continued to bolster the Trust’s revenue and NPI in the third quarter. The proposed acquisition of Bowsprit by OUE Lippo Healthcare Limited will be one of our growth drivers. First REIT will then be able to access a more diversified pool of assets via the right of first refusal agreements granted by both OUE Lippo Healthcare Limited and PT Lippo Karawaci Tbk for their portfolios. This will effectively expand First REIT’s geographical catchment within Asia, allowing the Trust to potentially pursue more yield-accretive acquisitions to deliver stable returns to our Unitholders.”

First REIT recently saw its unit price decline by a substantial amount. For those who wish to know more about the development, you can headhere.

Last but not the least, we have EC World Real Estate Investment Trust (SGX: BWCU), or EC World REIT.As a quick introduction, EC World REIT is the first Chinese specialized logistics and e-commerce logistics REIT. It owns properties mainly used for e-commerce, supply-chain management and logistics.

For the quarter ended 30 September 2018, EC World REIT reported that gross revenue came in 0.1% higher year-on-year to S$23.9 million while NPI grew by 0.5% year-on-year to S$ 22.2 million. Similarly, the REIT’s DPU was up by 9.0% as compared to last year to 1.57 cents. EC World REIT’s DPU benefited from lower expenses and the absence of a 5% withholding tax that was charged in 2017’s third quarter. If the impact from the withholding tax is removed, EC World REIT’s year-on-year DPU growth in 2018’s third quarter would be 2.3%.

As of 30 September 2018, the REIT’s gearing was 30.7% and its committed occupancy rate stood at 99.2%.

Goh Toh Sim, CEO of EC World REIT’s manager, shared the following comments on the REIT’s outlook:

“We are delighted to deliver another quarter of healthy distributions for our unitholders despite the macroeconomic headwinds and global uncertainty. EC World REIT’s assets are generally unaffected as the tenants within the portfolio serve primarily the domestic China market focused on domestic consumption. As such, we do not expect the ongoing global uncertainty to have a material negative impact on the operation of our assets.”


So there you go, three REITs that are trading at high yields of 8%. Investors should be reminded, however, that high yields alone are not enough to justify a buy decision. Thus, it is important the investors do their research on the trust’s future income prospects before committing any capital.

$First Reit(AW9U.SI) $EC World Reit(BWCU.SI) $Cache Log Trust(K2LU.SI)

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What Investors Should Know About First Real Estate Investment Trust’s 2018 Full Year Results
- Original Post from The Motley Fool Sg

On Wednesday, 16 January, First Real Estate Investment Trust (SGX: AW9U) released its financial results for the fourth quarter and full-year of 2018. First REIT has been in the spotlight recently, after a dramatic two-day spell in November when its shares crashed by more than 15%. Some market participants were worried that the credit downgrade of its sponsor and main tenant Lippo Karawaci Tbk would hurt the REIT going forward.

Investors are,therefore, keen to find any clues or updates by management during its earnings update. Here’s what I found out from its earnings release.

Financial performance remained robust

1) Distribution per unit (DPU) for the fourth quarter remained unchanged from a year ago at 2.15 Singapore cents.

2) During the quarter, gross revenue, net property income, and distributable income increased by 2.7%, 1.9, and 1.4% year-on-year respectively.

3) Over the full year, DPU increased by 0.4% from 2017.

4) Full year gross revenue, net property income and distributable income rose 4.7%, 4.5% and 1.5% respectively.

5) The table below shows the trust’s DPU track record over the last six years:

Source: First REIT FY2018 presentation slides

What’s behind the numbers?

First REIT delivered another strong set of results over the quarter. The higher revenues and net property income was partly due to the contributions from the new properties acquired in 2017 — Siloam Hospitals Buton & Lippo Plaza Buton and Siloam Hospitals Yogyakarta.

Additionally, the existing properties with their built-in rental escalations was also a contributing factor to the higher revenue and property income.

Healthy financial position

1) Total debt increased to S$503.0 million from S$478.6 million a year ago.

2) Gearing ratio, while higher at 35.0% compared to 33.6% last year, still remained some way below the 45% regulatory cap.

3) The REIT has S$176.0 million in debt headroom before it reaches the regulatory limit.

4) Net asset value increased by 1.04 Singapore cents to 102.51 Singapore cents.

5) 59.0% of its debt is on a fixed rate basis.

6) “Trade and other receivables” decreased to S$32.4 million from S$49.3 million a quarter ago.

Positive signs

The gearing ratio of a REIT is the ratio of debt to assets. The lower the gearing ratio, the more financial flexibility the REIT has to take on more debt for growth through acquisitions. As of 31 December 2018, First REIT had a gearing ratio of 35.0%, which is a safe distance from the regulatory limit. It also affords the REIT additional debt headroom.

Ever since Lippo Karawaci’s credit downgrade, investors have been keeping a close eye on the “trade and receivables” line of the balance sheet. The “trade and receivables” in this case refers to the cash that is owed to the REIT by its tenants. A high trade and receivables could be an early sign that its tenants are not able to pay First REIT its due.

In the last quarter, trade and receivables increased by S$24 million. However, this quarter, the trade and receivables was reduced by S$17 million, which is a positive sign.

Key developments this year

OUE Ltd (SGX: LJ3) and OUELippo Healthcare Ltd (SGX: 5WA) (OUELH) have completed the acquisition of Bowsprit, First REIT’s manager, from Lippo Karawaci.

OUELH also completed the acquisition of 83.6 million units from Lippo Karawaci, which represents 10.6% of the total unitholding of First REIT.After the acquisition, Lippo Karawaci and OUELH have equal stakes in the REIT and have become joint sponsors.

With the addition of OUELH as sponsors, First REIT now has right of first refusal (ROFR) to both Lippo Karawaci’s and OUELH’s pipeline of healthcare properties.

The manager of First REIT has said that it is looking to rebalance its portfolio by exploring other geographical regions which the new sponsor has assets in.

The Foolish bottom line

Overall, 2018 was a year of major changes for the REIT. With the change of ownership and addition of OUELH as a sponsor, the REIT now has plans to leverage on OUELH to expand its geographical reach.

The concerns that Lippo Karawaci was unable to pay off its rental obligation has also partially been eased as the latest report showed strong cash flows and a decrease in trade and other receivables this quarter.

At the time of writing, First REIT’s units changed hands at S$1.00 per piece, which translates to a price-to-book ratio of 0.95 and a distribution yield of 8.35%.

$First Reit(AW9U.SI)

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Is First Real Estate Investment Trust Or Parkway Life REIT A Better Buy Now? Part 1
- Original Post from The Motley Fool Sg

Parkway Life REIT (SGX: C2PU) and First Real Estate Investment Trust (SGX: AW9U) are real estate investment trust (REIT) focusing on healthcare and healthcare-related real estate assets throughout Asia.

In general, healthcare related Singapore REITs have stable earning power by owning assets like hospitals and nursing homes. Such stability of income would appeal to conservative income investors, especially those who seek to generate sustainable dividend from their investments.

For those investors, they might want to know which of the following two Singaporean REITs is a better buy is now. Clearly, there is no easy answer to the above question. After all, we do not know what will happen in the future.

Nevertheless, we will like to put the duo to a test that is made up of three parts. In this article, we will focus on the first part – the track record of growth in distribution per unit (DPU) in the last decade.

The showdown

Let’s begin with Parkway Life REIT.

From FY2008 to FY2017, Parkway Life REIT has grown its DPU from 6.83 cents to 13.35 cents. In other words, DPU was up by 95.5% during that period, giving an investor a compounded annual growth rate (CAGR) or 7.7%.

And now for First REIT.

From FY2008 to FY2017, First REIT has grown its DPU from 3.39 cents (adjusted for the right issues in 2010 of 5 shares for every existing 4 shares) to 8.57 cents. In other words, DPU was up by 152.8% during that period, giving an investor a compounded annual growth rate (CAGR) or 10.9%. Here, we assume that investors subscribed to the additional right issues in 2010.


In sum, both REITs did well in the last decade in growing their DPU. Among the two, First REIT grew its DPU at a higher rate during that period.

Keep a look out for the 2nd part of the comparison over the next few days.

$First Reit(AW9U.SI) $ParkwayLife Reit(C2PU.SI)

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What To Look Out For When Frasers Commercial Trust and ESR-REIT Release Their Earnings Update
- Original Post from The Motley Fool Sg

Earnings season is finally upon us. This week, three real estate investment trusts (REITs) will be releasing their earnings updates for the final quarter of 2018.

First Real Estate Investment Trust (SGX: AW9U) will be giving its update on Wednesday, while ESR-REIT (SGX: J91U) and Frasers Commercial Trust (SGX: ND8U) will be providing their quarterly reports on Friday. In an earlier article here, I looked at three things to look out for when First REIT releases its earnings report on Wednesday.

In this article, I will take a look at what investors should focus on when ESR-REIT and Frasers Commercial trust provide their quarterly reports on Friday.

Frasers Commercial Trust

Frasers Commercial Trustwill release an earnings update for the October to December 2018 period, which also marks the start of its new financial year. The trust, which owns six office buildings and business parks, reported a slightly lower distribution per unit in its last financial year ended 30 September 2018.

The lower distribution was partly due to the absence of revenue contribution of 55 Market Street, which was divested in August 2018.

In the next earnings release, Frasers Commercial Trust will likely report lower year-on-year revenue and net property income again as the trust has yet to recycle its capital unlocked from the sale of 55 Market street.

Investors should also have their eyes peeled on the performance of Alexandra Technopark, the largest revenue contributor for the trust. In the last financial year, lower occupancy due to upgrading works resulted in a 33% decline in net property income.

With the asset enhancement initiatives almost complete, I will be looking out for any updates on tenant uptake so far.

Also, with three of the trust’s properties located in Australia, it will be interesting to find out how the properties fared in Singapore dollar terms following the continued depreciation of the Australian dollar.


ESR-REIT will be releasing its first earnings update since its merger with Viva Industrial Trust, which makes it the fourth largest industrial Singapore-REIT in terms of asset value.

The scheme of arrangement of ESR-REIT and Viva industrial trust resulted in stapled securities of Viva Industrial Trust being delisted in October last year and the issuance of a 1.56 billion new ESR-REIT units.The newly-combined ESR-REIT now has 57 assets in Singapore worth around S$3.1 billion.

Investors will be keeping a close eye on the gearing and interest-coverage ratios of the newly-integrated REIT. It will also be crucial to find out the initial distribution per unit of the REIT after the completion of the merger.

In addition, there might be key updates on how ESR REIT plans to make use of its right of first refusal assets and whether it plans to expand overseas within the next couple of years.

Other things to look out for include updates on asset enhancement initiatives at 30 Marsiling Industrial Estate Road 8 and the initial revenue contribution from the newly-acquired 15 Greenwich drive.

$First Reit(AW9U.SI) $ESR-REIT(J91U.SI) $Frasers Com Tr(ND8U.SI)

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3 Things To Look Out For When First Real Estate Investment Trust Releases Its 2018 Fourth-Quarter Earnings Update
- Original Post from The Motley Fool Sg

First Real Estate Investment Trust (SGX: AW9U) will release its earnings update for the fourth quarter of 2018 on Wednesday. Here are three updates to keep an eye on.

Update on Lippo Karawaci’s ability to meet financial obligations

In a dramatic two-day spell in November, First REIT’s unit price crashed by more than 15%. The sharp fall in price was due to the credit rating downgrade of First REIT’s main tenant and sponsor, Lippo Karawaci.

Investors will be keen on what management has to say about the credit downgrade and whether there is any risk that Lippo Karawaci will not be able to pay the rent that it owes the REIT.

On top of that, we should also continue to monitor the “inventory receivables” on the balance sheet. The inventory receivables are the amount that is owed to the REIT by its tenants. At the end of the third quarter of 2018, the inventory receivables doubled to S$49.2 million from S$25.9 million on 31 December 2017. At the same time, revenue had increased at a slower rate of 5.4% over the first nine months of the year. Another large increase in inventory receivables could be an early warning sign that Lippo Karawaci is having trouble meeting its financial obligations to pay First REIT.

Risk of non-renewal for master leases expiring in 2021

Another overriding concern is the risk that even if Lippo Karawaci can pay First REIT, there is a chance that Lippo Karawaci might not renew its initial batch of master leases that expire in 2021. Previously, First REIT’s management had said that the chance of non-renewal was very low, but recent developments to Lippo Karawaci’s financial position could mean the situation may have changed.

In October 2018, Lippo Karawaci also sold a 10.6% stake in First REIT to OUE Lippo Healthcare Ltd (SGX: 5WA), leaving them with approximately equal stakes. If Lippo Karawaci decides to sell off its remaining stake, it becomes a greater possibility that it will not renew its master lease agreements, leaving First REIT in a difficult position.

Hopefully, in this end-of-year update, First REIT’s management can provide more colour on this risk and what investors should expect in the future.

Updates on plans in utilising the enlarged right of first refusal portfolio

With OUE Lippo Healthcare’s purchase of 10.6% of First REIT from Lippo Karawaci, First REIT now has an enlarged pool of right of first refusal assets comprising both OUE Lippo Healthcare and Lippo Karawaci healthcare assets.

First REIT is seeking to expand its portfolio, where up to 50% of its assets are located outside its current core market of Indonesia.

Investors should keep a watch on what its plans are on this expansion. Given that management has approximately S$110 million in debt headroom before it hits the 45% regulatory gearing cap, are there plans for equity fundraising to pursue this goal of expansion?

$First Reit(AW9U.SI)

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The Weekly Nibble: Best Singapore Shares For 2019
- Original Post from The Motley Fool Sg

Here are some of the most popular articles that have appeared on The Motley Fool Singapore’s website for the week.

The 30 Best Shares In Singapore For 2019

My Foolish colleague, Chong Ser Jing, lifts the veil on the 30 top Singapore stocks to buy in 2019. He used Joel Greenblatt’s Magic Formula as a tool to unearth those shares. The formula was made famous in Greenblatt’s book, The Little Book That Beats The Market.

To go one step further to know how cheap and good the 30 stocks are, you can check out another of Ser Jing’s article here. However, as discussed here, not all the 30 shares could turn out to be winners. Diversification is critical when using the Magic Formula investing strategy.

DBS, UOB or OCBC: Who has a Better Share Valuation for 2019?

DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39) and United Overseas Bank Ltd (SGX: U11) have seen their share prices fall significantly since early-2018. For instance, since hitting a high of S$30.84 on 30 April 2018, DBS’ share price has fallen around 20% to close at S$24.78 yesterday.

With the lower stock prices, are there opportunities for long-term investors to scoop up any of the bank’s shares? To find out the answer, we can compare the valuations of the three banks. So, jump into the article by Lawrence Nga to know more about the price-to-book ratios, price-to-earnings ratios, and dividend yields of the trio.

2 REITs You Can Buy During This Stock Market “Sale”

First Real Estate Investment Trust (SGX: AW9U) and CapitaLand Retail China Trust (SGX: AU8U) are two real estate investments trusts (REITs) that are selling significantly below their peak unit prices. In this article, Jeremy Chia explores why those REITs could make great investments if investors look beyond the unit price fall.

$CapitaR China Tr(AU8U.SI) $First Reit(AW9U.SI) $DBS(D05.SI) $OCBC Bank(O39.SI) $UOB(U11.SI)

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