The Top 3 Yielding REITs in Singapore Now
- Original Post from The Motley Fool Sg

Last month, investors in Singapore saw one of the steepest sell-offs of a real estate investment trust (REIT) in recent memory.

First Real Estate Investment Trust (SGX: AW9U) slid more than 10% in just two days as reports about the financial health of its main tenant, Lippo Karawaci Tbk PT spooked investors.

REITs are often considered more stable investments than stocks because their rental income is usually more consistent and they tend to have fewer business risks than traditional companies. Because of these reasons, a large decline in a REIT’s unit price, such as First REIT’s, is a rare occurrence.

That being said, the decline in price now means that investors who are willing to take some risks with First REIT can buy in at a much lower price. As the yield of a REIT is a function of its price, it also means that investors who buy now will also enjoy a much higher distribution yield than if they had bought it just a week earlier. First REIT now sports the fifth highest yield among REITs in Singapore.

With that in mind, I thought it would be useful to give investors a list of the top three REITs with the highest year-to-date annualised yields in Singapore.

Lippo Malls Indonesia Retail Trust (SGX: D5IU)

Top on the list is another REIT that is linked to Lippo Karawaci. Like First REIT, Lippo Malls Indonesia Retail Trust has fallen hard in recent months. Year-to-date, the REIT has shed more than 40% of its value amid concerns over its sponsor.

The falling Indonesian Rupiah has not helped either and is another factor that has caused distributions to be lower for local investors.

Lippo Malls Indonesia Retail Trust currently has an annualised yield of 12%.

Cache Logistics Trust (SGX: K2LU)

With an annualised yield of 9%, Cache Logistics Trust comes in at second place. It invests primarily in logistics warehouse properties located in Singapore, Australia, and China.

The trust has been suffering from higher foreign exchange losses this year, largely due to the weaker Australian dollar. Consequently, its net income has slid 7.1% between January to September this year, compared to last year. Its distribution per unit has also declined 12%, which has resulted in its unit price falling almost 20% so far this year.

EC World Real Estate Investment Trust (SGX: BWCU)

Third on this list is EC World REIT with its annualised yield of 8.8%. It invests in specialised and e-commerce logistics properties in China. So far this year, the REIT has been doing well with gross revenue and distributable income up 2.9% and 3.0% respectively. It made its first acquisition last year, expanding its property count to seven, which was part of the reason for the improved performance this year.

The Foolish bottom line

Fears of rising interest rate and geopolitical risk have caused a broad market sell-off this year. The falling stock market has resulted in REITs in Singapore currently sporting much higher yields than they did last year.

That being said, the yield of a REIT is not the only aspect that investors should look out for. What is perhaps more important is the stability of distributions and whether the REIT can grow over time. Investors should consider things like concentration risk, gearing, and interest cover when assessing the stability and growth potential of a REIT.

$First Reit(AW9U.SI) $EC World Reit(BWCU.SI) $Lippo Malls Tr(D5IU.SI) $Cache Log Trust(K2LU.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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2 REITs You Can Buy During This Stock Market “Sale”
- Original Post from The Motley Fool Sg

2018 has certainly not been kind to stock investors. Higher interest rates, uncertainty over US-China trade relations, global events like Brexit negotiations and unstable emerging market currencies have each contributed to the stock market’s decline.

Real estate investments trusts (REITs) have also not been spared, with many REITs trading below 10% or more from their peaks. However, market downturns can be great for long-term investors. It gives us the opportunity to buy securities at bargain prices and REITs, in particular, are offering much higher yields at the moment.

With that in mind, I did a little research and found two REITs that are trading well below their peaks and could make great investments during this market downturn.

A healthy REIT

First Real Estate Investment Trust (SGX: AW9U) is a healthcare REIT that owns hospitals and nursing homes, mostly in Indonesia.

Over a dramatic two-day spell in November 2018, First REIT saw its unit price decline by more than 15%. One of the reasons for the sharp decline was due to the downgrading of the credit rating of Lippo Karawaci, the REIT’s sponsor and main tenant. Market participants were concerned that the lower credit rating may increase the default risk of First REIT’s tenant.

However, in my view, the downgrading of Lippo Karawaci doesn’t necessarily mean it will be unable to meet its short-term financial obligations. In fact, I think it is quite unlikely that Lippo Karawaci will not be able to pay First REIT, and that the market’s reaction to the news has been overblown.

At the time of writing, First REIT’s units trade at S$0.98 per piece and have an enticing distribution yield of 8.7%. Considering First REIT’s track record of growth and low gearing ratio, I believe buying this REIT at this price offers a favourable risk-reward profile for long-term investors.

A different kind of retail therapy

With the current economic climate in China, it is not surprising to see investors neglect Chinese-focused REITs. CapitaLand Retail China Trust (SGX: AU8U) has not been spared either, with its unit price down 19% from its 52-week high.

However, despite operating in harsh conditions, there are plenty of reasons to be optimistic about CapitaLand Retail China Trust.

In the third quarter of 2018, the REIT reported a 12.1% increase in rental reversion rate, which demonstrates the resilience of its properties and the pricing power the REIT has with its tenants. CapitaLand Retail China Trust also posted higher shopper traffic and tenant sales in the last quarter. Shopper traffic climbed 19.6% while tenant sales grew 21.4%.

These trends suggest that the Chinese retail market continues to be healthy despite the uncertainties surrounding the US-China trade conflict.

At the time of writing, CapitaLand Retail China Trust trades at S$1.37 per piece, which translates to a 13% discount to book value and a tasty distribution yield of 7.4%. While there are foreign currency risks involved with overseas REITs and uncertainties surrounding the trade conflict persists, the high distribution yield and CapitaLand Retail China Trust’s propensity for growth could make buying the REIT a risk well worth taking.

$CapitaR China Tr(AU8U.SI) $First Reit(AW9U.SI)

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