4 Overseas REITs Yielding 8.6% and Above

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Singapore is blessed to have a large variety of REITs that investors can choose from.

REITs are perfect as income instruments as they are mandated to pay out at least 90% of their profits as distributions.

By investing in REITs, investors can gain exposure to a wide range of different property types spread across many countries and regions.

Even on the Singapore Exchange, there is a good selection of REITs with overseas assets that allow investors to ride on different growth trends and secular economic tailwinds.

Furthermore, a good number of these REITs also provide attractive distribution yields.

Here are four REITs with overseas assets that sport distribution yields of 8.6% or more.

Cromwell European REIT (SGX: CWBU)

Cromwell European REIT, or CEREIT, owns a high-quality, pan-European portfolio of more than 110 properties comprising light industrial, logistics, and Grade A office assets.

CEREIT’s assets under management stood at €2.3 billion as of 30 September 2023.

The REIT provides investors with exposure to 10 European countries with favourite e-commerce structural growth trends.

CEREIT’s indicative distribution per unit (DPU) for the first nine months of 2023 (9M 2023) was €0.11795, down 4.1% year on year.

The industrial cum commercial REIT’s trailing 12-month DPU stood at €0.16325, giving its units a trailing distribution yield of 12.6%.

Its portfolio is well-diversified with 1,058 leases spread among 836 tenants, with the top 10 tenants making up just 23.6% of gross rental income (GRI).

CEREIT’s total portfolio occupancy stood high at 95.2% with a positive rental reversion of 10.6%.

Aggregate leverage was 41.2% and the REIT had a relatively low cost of debt of 2.96%.

United Hampshire US REIT (SGX: ODBU)

United Hampshire US REIT, or UHREIT, owns a portfolio of 20 grocery-anchored and necessity-based retail properties along with two self-storage properties.

Its AUM stood at US$746 million as of 30 September 2023.

UHREIT’s trailing 12-month DPU came in at US$0.0562 based on its first half of 2023 (1H 2023) results, giving its units a trailing distribution yield of 12.4%.

The US retail REIT released its third quarter 2023 (3Q 2023) business update which saw committed occupancy stay high at 97.2%.

The portfolio also enjoyed a long weighted average lease expiry of 7.2 years with a high tenant retention rate of 92%.

Gross revenue for 9M 2023 climbed 11.7% year on year to US$54.4 million while net property income (NPI) rose 12.2% year on year to US$38.7 million.

Distributable income, however, dipped slightly to US$23.7 million from US$24.6 million as the manager elected to receive its management fee in cash.

The construction of the new academy building at Port St Lucie is proceeding ahead of schedule with the store slated to open by end-November.

This new store will improve the financial performance of the portfolio and is expected to generate significant foot traffic.

Sasseur REIT (SGX: CRPU)

Sasseur REIT is a China-based retail REIT with four outlet malls located in three cities – Chongqing, Hefei, and Kunming.

The portfolio’s valuation stood at RMB 8.5 billion as of 31 December 2022.

For 9M 2023, outlet sales jumped by close to 19% year on year to RMB 3.4 billion.

However, rental income slipped by 1.5% year on year to S$92.9 million because of the depreciation of the RMB against the Singapore dollar.

DPU for 9M 2023 fell by 7.9% year on year to S$0.04834.

Sasseur REIT’s trailing 12-month DPU stood at S$0.06136, giving its units a trailing distribution yield of 9.1%.

The REIT’s sponsor, Sasseur Group, is expanding its asset-light model with its growing footprint in China and is now managing 17 outlets with another upcoming outlet in 2024.

Sasseur REIT has one of the lowest gearing ratios among Singapore REITs at just 25.4% with a sizable debt headroom of S$874 million for potential acquisitions.

Its cost of debt, however, stood high at 5.8% as of 30 September 2023 with an interest coverage ratio of four times.

Daiwa House Logistics Trust (SGX: DHLU)

Daiwa House Logistics Trust, or DHLT, is a logistics REIT with a portfolio of 16 modern logistics properties in Japan with an AUM of JPY 87.5 billion as of 31 December 2022.

Its 1H 2023 DPU was S$0.0261, up 0.4% year on year, giving the REIT an annualised DPU of S$0.0522.

The forward distribution yield for DHLT stood at 8.6%.

DHLT’s 3Q 2023 business update saw occupancy hit 100% as of 30 September 2023.

The REIT manager also continued its record of 100% lease renewals.

DHLT’s 9M 2023 rental income and NPI increased by 4.9% and 3.9% year on year, respectively, to JPY 4.1 billion and JPY 3.5 billion.

Distributable income inched up 2.2% year on year for the same period to S$27 million.

The logistics REIT’s gearing stood at 35.7% as of 30 September 2023 with a very low cost of borrowings of just 0.99%.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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