These 2 Under A Billion Dollar REITS Currently Have Yields Of Over 7%
Real estate investment trusts (REITs) have long been a popular investment vehicle for Singaporeans. Why is that so? This is due to the defensive nature of such investments and also the high income paid out to unitholders. Moreover, in a low-interest rate environment where our fixed deposit offers less than 1% return, REIT becomes a rather attractive alternative.
In this article, I’ll share with you two of the highest yielding REITs in the market at the moment, both at about 8% distribution yield.
IREIT Global
IREIT Global (SGX: UD1U) focuses mainly on investing in a portfolio of income-producing real estates in Europe. Its portfolio comprises of five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.
The REIT’s assets have a long term lease, with weighted average lease expiry of 5.7 years. As of March 2017, the committed occupancy for the REIT was 99.8%.
For investors who are interested in REIT, it is important that they pay attention to two points. Firstly, there is currency exposure to this investment as IREIT Global derives its income in Euro. Secondly, there is a concentration of income whereby the top five tenants account for more than 95% of the total rental income.
At $0.77, the trust is trading at 8.0% distribution yield and 1.2 times price-to-book (P/B) ratio.
Soilbuild Business Space REIT
Soilbuild Business Space REIT (SGX: SV3U) is a REIT that invests primarily in industrial and business parks properties in Singapore. The REIT has 12 properties under its belt, with examples like Solaris, West Park BizCentral, Eightrium and others.
Soilbuild latest occupancy rate, as at March 2017, stands at 91.8%, which is ahead of the industry average of 89.4%. However, the latest occupancy rate is still lower than the same period in 2016 where occupancy rate was 94.8%.
On a positive note, Soilbuild’s tenants base is relatively diversified, with the top 10 tenants accounting for 42.4% of the gross rental income.
At $0.71, the REIT is trading at 8.0% distribution yield and a P/B ratio of 1.
Conclusion
So there you go, two REITs that are trading at a high yield of more than 7%. Investors should be reminded, however, that low price alone is not enough to justify a buy decision. It is important that investors carry out their own research on the trust’s future income prospects before committing any capital.
