Best REITs In Singapore 2022 For Your Investment Portfolio

Yen Joon
Last updated Mar 25, 2022

Singapore REITs are a less expensive way to own properties that give you good, passive yields. If you’re looking for the best Singapore REITs to buy in 2022, read on.

Looking for the best Singapore REITs or S-REITs to buy in Singapore in 2022? Singapore REITs have traditionally been attractive investments that offer stable passive income, averaging from 4% to 8% in returns annually. 

In fact, despite underperforming in 2021 as a result of COVID-19 lockdown measures, S-REITs still managed to average an annual 6% returns last year, which is still higher compared to investments like Singapore Savings Bonds, fixed deposits, and savings accounts.

So, if you’re shopping for Singapore REITs in 2022, we’ve shortlisted a list below for you to consider. But first, let’s take a look at how to filter good REITs so you have a rough idea on what to look out for when considering your options. 


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How to filter and pick good REIT stocks

In essence, when looking at REITs, these are some of the aspects to consider:

  • Dividend payouts 
  • Company’s profitability
  • Aggregate leverage
  • Occupancy rate
  • Net asset value

Dividend payouts

One common mistake that investors tend to make is to jump ahead and buy a REIT that offers the highest dividend yield. After all, who wouldn’t want a chance to take a bite at a big juicy dividend? 

While dividend yields are important, they don’t give you the whole picture. 

For example, unless the REIT’s earnings are stable, any disruptions would see the share price drop in response, which would result in a fall in the dividend yield as well. 

A high dividend yield could also paint a picture of a company that’s struggling financially and has seen a drop in its share prices. As a result, the dividend yield is high because its share price has decreased. 

Moreover, remember that REITs are required to pay at least 90% of their income as dividends. Therefore paying higher dividends isn’t sustainable as REITs should have some cash reserves as a buffer.

When looking at the performance of a REIT, a better method is to look for growth in a REIT’s distribution per unit (DPU). The DPU is basically the amount of dividend a REIT investor would receive for each share, and is calculated by dividing the distributable income with the total number of units outstanding. 

DPU is more accurate because it shows whether there’s dividend growth each year as it shows that the REIT is sustainable. 

As an example, let’s take a look at Mapletree Logistics Trust, one the largest logistics S-REITs with a well-diversified portfolio across countries such as Singapore, Australia, Hong Kong, Japan, China, Malaysia, and South Korea. 

Here’s their distribution history in the last five years:

Financial yearDPU (in Singapore cents)
FY 2020/218.32
FY 2019/208.14
FY 2018/197.94
FY 2017/187.61
FY 2016/177.44

As you can see from the above, the DPU for Mapletree Logistics Trust REIT has been increasing year-on-year, even during when the pandemic struck. Its track record of giving out positive dividends to investors was simply icing on the cake.

Company’s profitability

Aside from the dividend yield, it also pays to know if the REIT is in good financial health. You can do this by looking at the gross revenue and net property income (NPI)

Gross revenue is basically the revenue (rental income) a REIT receives from its tenants, while NPI is derived by deducting related expenses such as management fees, maintenance fees, property taxes, and other operating expenses from the gross revenue. 

Again, here’s Mapletree Logistics Trust’s revenue and NPI in the past five fiscal years:

Financial YearGross revenueNet property income (NPI)
2020/21S$561.1MS$499.1M
2019/20S$490.9MS$438.5M
2018/19S$454.3MS$389.5M
2017/18S$395.2MS$333.8M
2016/17S$373.1S$312.2M

As we can see, there’s a strong growth in gross revenue and NPI. This means that Mapletree Logistics Trust is efficient at generating profit while reducing operating costs. A positive NPI also results in higher DPU.  

Conversely, a declining NPI could mean that the REIT’s portfolio has a lower occupancy rate or a lower rental reversion (negative rental rates upon renewal of lease). It could allude that the properties are depreciating in value because of a lack of upgrading/maintenance. 

Next, look at a REIT’s property yield, which evaluates the ability of a REIT in generating income in relation to the property valuation. In other words, a good property yield indicates that the properties are highly-valuable, and thus are generating healthy rental returns. 

On one hand, a low property yield suggests that a REIT isn’t maximising the income potential from its property portfolio. That said, high property yields could also mean that the REIT is charging high rental rates, which is unsustainable in the long-run. Remember to also compare the year-on-year property yield for growth, as well as yields to other similar REITs.

Although property yield isn’t easily available in annual reports, you can calculate it with the following formula: 

Property yield = NPI ÷ property valuation X 100%

According to Mapletree Logistics Trust’s 2020/21 annual report, the total market valuation of its assets is S$10.8B. 

So, the property yield in 2021 is: S$499.1M/S$10.8B X 100% = 4.62%

Aggregate leverage

Also known as gearing, aggregate leverage refers to a REIT’s debt-to-asset ratio, and is a metric used to determine a REIT’s financial leverage. 

Aggregate leverage is important to investors because a low aggregate leverage ratio indicates that a REIT has the capacity to take on more debt. Conversely, a high aggregate leverage ratio means that it has more debt and may struggle to repay its debt.

In Singapore, the aggregate leverage ratio limit is 50%, which was increased from 45% by the Monetary Authority of Singapore (MAS) in April 2020 to give S-REITs more flexibility to deal with challenges caused by the COVID-19 pandemic. 

Net aggregate leverage can be calculated by dividing the total debt by the total shareholders’ equity. 

Occupancy rate

Occupancy rate is the ratio of rented space to the total amount of available space and gives you a good sense of the REIT’s cash flow and management. For example, a retail REITs that owns a mall with only 35% occupancy rate tells you that something is amiss with the mall, whether it’s the location, surrounding amenities, or REIT manager.  

Net asset value

Next is net asset value (NAV), which is the net market value of the REIT’s assets, less all its liabilities. When you divide the NAV with total units issued, you will get the net asset value per unit. This tells you the net value of a REIT’s assets on a per share basis

NAV = value of assets – value of liabilities/total shares outstanding

NAV is useful as an investor because it tells you whether a REIT’s share is overvalued or undervalued when you compare it to the REIT’s share price. For instance, if the NAV is below the share price, this makes the share an attractive buy. 

With that out of the way, let’s take a look at the best REITs in Singapore to buy in 2022:

Best REITs in Singapore to own in your portfolio in 2022

1. Mapletree Logistics Trust

2020/21

Dividend yield4.3%
DPU8.32¢
NPIS$499.1M
Aggregate leverage ratio38.4%
Net asset value per unitS$1.33

We’ve already given a few excellent examples of Mapletree Logistics Trust above, so no surprises here. But in case you missed out, Mapletree Logistics Trust has seen year-on-year growth in its DPU, revenue, and NPI — a remarkable feat considering that most businesses have suffered during the COVID-19 pandemic.

According to Mapletree Logistics Trust’s 2020/21 annual report, it has S$10.8B worth of assets under management, 97.5% occupancy rate, and a total return of 27.4%. 

Source

As mentioned previously, Mapletree Logistics Trust also has a well-diversified portfolio with 163 properties across different sectors such as F&B and consumer staples, as seen from above.

Its portfolio is also spread geographically in countries like Singapore, Hong Kong, China, Japan, and South Korea.

With the REIT in good financial health, Mapletree Logistics Trust managed to acquire new properties with a total of S$1.6B in value. 

2. Mapletree Industrial Trust

2020/21

Dividend yield5.1%
DPU12.55¢
NPIS$351.1M
Aggregate leverage ratio40.3%
Net asset value per unitS$1.66

Being an industrial REIT, its portfolio consists of data centres, business parks buildings, high-tech centres, and flattened factories, among others.

In its 2020/21 annual report, Mapletree Industrial Trust’s assets under management increased by 14.7% from the year from S$5.9 billion to S$6.8 billion, mainly because of acquisition of new data centres in North America. With most of the global workforce and students working and studying at home during the height of the COVID-19 pandemic, data traffic and the importance of data centres spiked worldwide. 

Source

Meanwhile, their tenants are diversified across many different sectors such as manufacturing, information and communications, and financial and business services. 

2020/21

Financial yearDPU (in Singapore cents)
FY 2020/2112.55
FY 2019/2012.24
FY 2018/1912.16
FY 2017/1811.75
FY 2016/1711.39

The DPU has also increased over the last five years, with a 2.5% year-on-year growth to 12.55¢. 

There has also been an increase in investments over the years, including capital appreciation and distribution yield. 

3. Parkwaylife REIT

2020/21

Dividend yield2.74%
DPU14.08¢
NPIS$111.234M
Aggregate leverage ratio35.4%
Net asset value per unitS$2.37

Parkwaylife REIT is healthcare REIT and is perhaps known for owning ‘atas’ hospitals in Singapore such as Parkway East Hospital, Gleneagles Hospital, and Mount Elizabeth Hospital. 

However, it also owns medical facilities and nursing homes in Japan and Malaysia. The majority of Parkway Life REIT’s assets are located in Japan, and the company has also been acquiring new medical facilities and nursing homes in Japan over the years. All in all, the market value of their 56 properties total to S$2.29 billion, with an occupancy rate of 99.7%. 

As a rapidly ageing nation, Japan requires more medical attention, good medical facilities, medical equipment, and medicine. As such, this makes Parkwaylife REIT a good REIT to have in your portfolio since demand for healthcare is high in Japan. What’s more, medical facilities will always be needed because people will fall sick and need access to medical equipment, medicines, etc. 

While the dividend yields are lower compared to other REITs, the DPU is high and it also has a steady dividend growth. 

4. Ascendas REIT

2020/21

Dividend yield3.19%
DPU15.25¢
NPIS$920.8M
Aggregate leverage ratio35.9%
Net asset value per unitS$2.38

Ascendas REIT is Singapore’s first and largest listed business space and industrial REIT and is one of the blue-chip S-REITs to invest in.

Source

Like most good REITs, its portfolio is diversified across different sectors and countries. It holds 200 commercial, business, and industrial properties in Singapore, Australia, the United States, United Kingdom, and Europe.

Financial yearDPU (in Singapore cents)
FY 2017/1815.98
FY 2018/1916.03
FY 2019*11.49
FY 202014.68
FY 202115.25

The DPU increased by 3.9% to 15.25¢ in 2021, while there’s also growth in gross revenue, NPI, and distributable income from the past year.

Additionally, the Ascendas REIT has also been acquiring new data centres, business centres, and logistics facilities in the United States and Singapore, while upgrading its existing assets.

*Due to a change in financial year end, FY2019 spans from 1 April 2019 to 31 December 2019. 

5. CapitaLand Integrated Commercial Trust

2020/21

Dividend yield5.40%
DPU10.40¢
NPIS$951.1M
Aggregate leverage ratio37.2%
Net asset value per unitS$2.06

CapitaLand Integrated Commercial Trust is Singapore’s largest retail REIT with a market capitalisation of S$13.5 billion. Previously, it was known as CapitaLand Mall Trust before it merged with CapitaLand Commercial Trust in November 2020, combining the retail portfolio of the former with the office assets of the latter, thus becoming one of the biggest REITs in Asia Pacific in the process. 

CapitaLand Integrated Commercial Trust owns shopping malls such as Bugis+, Bugis Junction, Tampines Mall, IMM Building, and Junction 8; integrated developments such as Funan, Raffles City, and Plaza Singapura; and Grade A office buildings such as Capital Tower, CapitaGreen, and Six Battery Road. 

Source

Despite the e-commerce boom and the work-from-home norm caused by the COVID-19 pandemic, its retail malls and offices continue to see an uplift in profitability and valuation, thanks to an enlarged portfolio of tenants, rejuvenation of its retail and lifestyle offerings, and diversified revenue streams. 

Conclusion

Keep in mind that these are not ‘must haves’ in your REIT portfolio, as there are many other S-REITs that have performed well and seen growth. 

However, the bottom line is that you should diversify your investments, and the five above not only offer some of the best dividend returns, but they also expose you to industrial, commercial/office, healthcare, and retail REITs. Remember to also look at a REIT’s financial reports to analyse its growth prospects, portfolio, and investment returns. 

Lastly, you can examine a REIT’s attractiveness with metrics like DPU and NPI, and comparing its stock price. 

Start building your REIT portfolio by opening an online brokerage account now.

Read these next:
5 Ways To Invest Money That Are Better Than Buying Toto
Guide To Real Estate Investment Trusts (REITs), And Whether You’re Ready For It
Ascendas REIT (A17U) Share Price & Dividends Guide: Is it Worth Buying?
Best ETFs In Singapore For Tracking Stocks, Bonds And REITs
How to Build a Passive Income Portfolio Using ETFs (And Why You Should)


By Kang Yen Joon
In my past life, I was always broke (I still am) because of a lack of financial literacy. These days, I publish a few posts every week* on personal finance to help you manage your money better.

*I mean, I’ll try


Yen Joon March 25, 2022 86406