Keppel KBS US And Sasseur REIT Delivered 20%+ Returns To Investors In 2019
There are 34 Real Estate Investment Trusts (REITs), five stapled trusts, and three property trusts listed on the Singapore Exchange Limited (SGX: S68). The sector has a combined market capitalisation of nearly S$100 billion, with Retail, Industrial and Office REITs making up the largest segments.
In general, REITs are one of Singapore investors’ favourite investment vehicles, mainly due to the predictability of REITs’ earnings over the long term.
Moreover, not only can Singapore investors buy REITs with exposure to Singapore properties but there are also plenty of REITs with international exposure. In this article, I’ll take a look at two of the best-performing international REITs year-to-date.
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.
1. Keppel-KBS US REIT (SGX: CMOU)
The first REIT on our list is Keppel-KBS US REIT (SGX: CMOU). As a quick introduction, Keppel-KBS US REIT invests primarily in income-producing commercial and real estate assets in key growth markets of the US. Currently, it has 13 office properties located in seven key growth markets in the US.
So far in 2019, Keppel-KBS’s share price was up by 21.3% from S$0.61 to S$0.74 (as of writing). Nevertheless, this is still below its 52-week high price of S$0.84. At its current price of S$0.74, Keppel-KBS is trading at a price-to-book (PB) ratio of 0.94 and a distribution yield of 6.7%.
In addition to the positive stock performance, Keppel-KBS delivered a strong earnings update in the latest quarter. Here are some numbers:
- Gross revenue increased by 24.2% year-on-year to US$29.4 million
- Net property income also rose, up by 23.7% to S$18.2 million
- Distribution per unit (DPU) was up by 30.4% on an adjusted basis to 1.5 US cents
Editor’s Note: Here is more information that you can read up on if you would like to know if Keppel KBS REIT is considered a US REIT and whether taxes will be imposed
2. Sasseur Real Estate Investment Trust (SGX: CRPU)
The next REIT on our list is Sasseur Real Estate Investment Trust (SGX: CRPU). As a quick overview, Sasseur is the first outlet mall REIT listed in Asia.
It owns four retail outlet mall assets in fast-growing cities in China such as Chongqing, Kunming, and Hefei.
So far in 2019, Sasseur’s unit price was up by 20.0% from S$0.65 to S$0.78 (as of writing). At its current price of S$0.78, Sasseur is trading at a PB ratio of 0.85 and a distribution yield of 8.7%.
The positive stock performance is not without reason. Since its IPO last year, Sasseur has delivered solid performance over a number of quarters, consistently ahead of its IPO guidance. The strong performance continued in the latest quarter ended 31 March 2019. Here are some numbers:
- Rental income was 2.4% higher than forecast, coming in at S$30.9 million
- Distributable income came in 9.3% ahead of its forecast
- DPU was higher by 9.3% at 1.656 cents (compared to the forecast)
From the above, we can see that both REITs have delivered solid returns to shareholders in the past few months. Nevertheless, investors should be reminded that past performance is no guarantee of future returns. Therefore, it’s important that investors carry out further research into these REITs before buying any.
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