There is a growth in popularity among Singaporeans for REITs (Real Estate Investment Trusts), due to the growth of the consumer market in China and an increase in office rentals – as reported by The Motley Fool.
The investor is exposed to a variety of assets and also enjoys relatively higher returns. There are two hot trusts which have given out higher distributions to the investors as to when compared with others.
Sasseur Real Estate Investment Trust
The entrusted manager agreement rental income or EMA saw an increase of 2.7% in the second quarter for Sasseur Real Estate Investment Trust(SGX: CRPU). It also saw an increase of 5.9% in its DPU(distribution per unit). This has been a direct result of the growth from the Chinese consumers as this trust owns four outlet malls in China. It earns through the fixed portion of the EMA rental income and which is directly related to the sales from the tenancy.
The Chongquing Mall in the first half of the year reported an increase of 10% in tenant sales. Similarly, malls in Hefei and Kunming increased by 30.5% and 33.6% respectively.
VIP members contribute half of all tenant sales. The sales from these members saw an increase of 39.7% until now.
Sasseur is trading at SGD 0.79 each that means a price-to-book ratio of 0.92 and dividend yield of 8.5%.
CapitaLand Commercial Trust
Also, known by the script SGX: C61U, this trust saw an increase of 1.9% in the second quarter for its distributions. This growth is really due to inflows from Galileo’s acquisition, better performance in the local portfolio and property acquired in May 2018.
This trust has seen growth from rising rental rates of Grade A offices in Singapore. The rates have seen a 1.3% increase every quarter and a yearly increase of 4.6%.
REITs portfolio has seen a growth of 3.5% for the monthly average gross rent between March and June.
Also, the trust’s expiring rent is below the rent of the market of SGD 11.30 per square feet. This will allow for higher rental rate negotiations for the trust. The CapitaLand Commercial Trust has a price-to-book ratio of 1.14 and an annualised distribution yield of 4.2%.