Billion Dollar REITs With High Yield
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2 Billion-Dollar REITs Yielding Above 6%

3 min read

When we think about real estate investment trusts (REITs), we think about the income or yield that they give us as investors. However, what may be just as important is how large these REITs are in terms of their market capitalisation, or market cap. REITs with larger market caps, on the whole, tend to be safer than smaller REITs – which is why smaller REITs can sometimes have higher yields.

With that in mind, here are the two highest-yielding REITs in Singapore that have a market cap of at least S$1 billion.

Disclaimer: This is not a sponsored post. Opinions expressed in the article by the author should not be taken as investment advice. Please do your own research and due diligence.


Manulife US REIT

Manulife US REIT Logo

First, is Manulife US Real Estate Investment Trust (SGX: BTOU), the first pure-play US commercial REIT listed in Asia.

The REIT has seven office properties in the US, with an aggregate net lettable area of 3.7 million sq ft.

Besides having a sturdy market cap of US$1.19 billion (S$1.63 billion) as of 3 June 2019, it also has a strong sponsor in the form of Manulife Financial Corporation – a leading Canadian financial services group.

Its latest quarterly results were impressive. Its long weighted average lease expiry (WALE) of 6.0 years and improvement in occupancy rate to 97.4% bode well for its longer-term prospects. Its adjusted distribution per unit (DPU) for Q1 2019 was up 0.7% year-on-year to 1.51 US cents.

At the current price of US$0.85 per unit, Manulife US REIT has a trailing distribution yield of 6.9%.

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CapitaLand Retail China Trust

CapitaLand Retail China Trust Logo

The second REIT yielding above 6% is CapitaLand Retail China Trust (SGX: AU8U), a retail-focused REIT that owns eight shopping malls in China, including in key tier-1 cities such as Beijing, Shanghai, and Guangzhou.

The REIT has a relatively low gearing, at just 35.5% (as of 31 March 2019), putting it well below the 45% regulatory limit for Singapore-listed REITs. To add to that, the REIT also has proactive capital management with 80% of its half-yearly distributable income hedged into Singapore dollars.

It also has an interest coverage ratio of 5.0x, meaning it is well-covered in terms of interest expenses on its outstanding debt. Although its gross revenue and net property income increased in Q1 2019, its DPU over the same period fell 5.8% year-on-year due to lower capital distribution over the quarter. However, the REIT still offers investors a rather tasty trailing distribution yield of 6.8% at its current price of S$1.49 per unit.

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Big Yielders

Overall, investors can receive a relatively high yield from the above billion-dollar REITs.

Although both have their individual challenges, it is up to investors whether they would prefer exposure to US commercial real estate (in the form of Manulife US REIT) or are more inclined to invest in China’s retail scene (via CapitaLand Retail China Trust).


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