5 Singapore REITs to Consider for Your Watchlist

Hougang Village Residence, Far East Hospitality Trust, FEHT

Some call this “home bias.”

But there are many reasons why Singapore investors prefer to put their money into real estate investment trusts (REITs), especially those that own properties located in our territory.

To begin with, Singapore REITs offer the opportunity to invest in multiple properties with a relatively small amount of money.

By staying local, investors avoid dealing with currency conversions.

There are also many property choices, ranging from retail, commercial and hospitality.

With these points in mind, let’s look at five Singapore REITs that derive their income primarily, if not entirely, from properties located in the city-state.

These REITs present attractive investment opportunities due to their strong local market presence and stable return potential.

1. Frasers Centrepoint Trust (SGX: J69U)

Frasers Centrepoint Trust (FCT) invests primarily in shopping centres located in central Singapore.

As of the financial year ending September 2023 (FY2023), FCT’s portfolio consisted of 10 shopping malls and one office building in Lion City, valued at nearly S$7 billion.

Singapore REIT’s recent performance has been decent.

For FY2023, gross revenue increased 3.6% year-on-year to approximately S$370 million, driven by improved occupancy rates, higher rental income from new and renewed leases and increased atrium revenue.

Meanwhile, property operating expenses increased nearly 6% year-on-year to S$104.1 million due to higher maintenance, utilities and personnel costs, leading to net property income increasing 2.7% year-on-year to S$265.6 million.

The FCT’s distribution per unit (DPU) decreased, but by a relatively small 0.6% year-on-year, to S$0.1215.

The culprit was higher financing costs.

2. Far East Hospitality Trust (SGX: T5T)

For hospitality, there is Far East Hospitality Trust (FEHT) which owns hotels and serviced residences in Singapore.

As of end-2023, FEHT’s portfolio consisted of 12 properties, comprising over 3,000 hotel rooms and serviced residence units, with a total valuation of approximately S$2.5 billion.

REIT performance has improved alongside increased tourism and business travel.

For 2023, FEHT’s gross revenue increased by approximately 28% year-on-year to S$106.8 million, driven by higher rental income from hotel and serviced residence head leases, as well as increased revenue from retail and office spaces.

This increase in revenue resulted in the commercial trust’s net property income rising by about 28% year-on-year to nearly S$99 million.

As a result, FEHT’s distribution per stapled security (DPS) increased by just over 25% year-on-year to S$0.0409.

3. CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust (CICT), Singapore’s largest REIT by market capitalisation, houses a collection of commercial and office properties.

As of the end of 2023, CICT’s portfolio comprised 21 properties in Singapore, two in Germany and three in Australia, with a total real estate value of S$24.5 billion.

CICT is one of the few REITs that managed to increase its DPU in the last quarter.

In 2023, gross revenue increased by around 8% year-on-year to S$1.56 billion, with nearly 93% of this revenue coming from its 21 commercial properties in Singapore.

This revenue growth was driven by full-year contributions from its three newly acquired properties in Australia and improved performance from its existing properties.

However, property operating expenses increased 11.4% from the previous year due to costs associated with Australian properties, as well as higher spending on utilities, maintenance and marketing.

The end result is a 7% year-on-year increase in net property income to S$1.12 billion.

CICT’s 2023 DPU increased by 1.6% year-on-year to S$0.1075.

4. Paragon REIT (SGX: SK6U)

Like CICT, Paragon REIT also owns properties in Singapore and Australia.

In both cases, the focus is on retail.

By the end of 2023, its portfolio includes three properties in Singapore and two in Australia.

For 2023, the REIT saw a 1.8% increase in gross revenue from the previous year, reaching just under S$290 million, with just over 77% of its revenue coming from its Singapore properties.

Net property income rose 1.7% year-on-year to just over S$215 million.

However, during the same period, Paragon REIT’s DPU for 2023 fell by about 9% to S$0.0502, due to higher financing cost.

5. Lendlease Global Commercial REIT (SGX: JYEU)

Finally, we have Lendlease Global Commercial REIT (LREIT), which focuses on commercial and office properties located in Singapore and Italy.

As of the financial year ending 30 June 2023 (FY2023), its portfolio includes popular shopping malls such as Jem (an integrated office and retail mall) and 313@Somerset (a retail mall) in Singapore, as well as Sky Complex (an office building) in Italy, with a total value of S$3.65 billion.