Real estate is a perennial favorite investment instrument in Singapore. People in Singapore love investing in properties, be it renting out their HDB flats for rental income, buying a private property to flip it for profits or investing into strata commercial and retail units.
Aside from purchasing physical properties to rent out for income, investors can also turn to the Singapore Exchange (SGX) for a wide selection of investment opportunities in the real estate market. This ranges from property developers, property trusts and of course, real estate investment trusts (REITs). SGX, being the largest REIT market in Asia (excluding Japan), is able to offer 43 REITs and property trusts with a total market capitalisation at over $84 billion.
In recent years, lower rental yields in the property market has led to more Singapore investors considering REITs instead. Being professionally managed, most Singapore REITs are able to deliver superior returns to investors via their high dividend payouts.
A common misconception that some newbie Singapore REIT investors may have is that Singapore REITs would hold only local real estate investments within their portfolio.
This is not true. Over 75% of Singapore REITs and property trusts hold overseas properties within their trusts. There are even a few REITs that hold overseas properties exclusively.
In today’s article, we look at four REITs in Singapore that only hold overseas properties.
#1 Manulife US REIT
Launched in 2016, Manulife US REIT is the first pure-play US office REIT listed in Asia. Its
The company currently owns four freehold office buildings in the US, all of which have an occupancy rate of 93% or more. The company currently gives a dividend yield of about 7%, and is trading at a price-to-book (P/B) ratio of 0.99 (close to its book value). Its current share price is USD0.905, up from its Initial Public Offering (IPO) price of USD0.83.
#2 IREIT Global
IREIT Global was listed on SGX in 2014 at an IPO price of $0.88. It’s the first European REIT to be listed in Singapore.
Though it’s considered a European REIT, the company’s investments are held entirely within Germany. It’s also interesting to note that while the REITs owns five office buildings within Germany, it only has a total of 19 tenants, of which one tenant – Deutsche Telekom, account for 52.6% of its total revenue. That’s a lot of income from just one single tenant.
IREIT Global is currently trading at $0.76 with a price-to-book (P/B) ratio of 1.16. Its dividend yield is at an attractive 8.05%.
#3 Frasers Logistics & Industrial Trust
Listed in June 2016, Frasers Logistics & Industrial Trust owns 61 industrial properties across Australia. Its current occupancy rate is 99.4% comprising of a total of 72 tenants.
Dividend yield is at an attractive 7.16%. It’s currently trading at $1.09, up from it IPO price of $0.89 with its current P/B ratio at 1.17.
#4 EC World REIT
If you were looking to ride on the booming e-commerce and logistic space in China, EC World REIT would be one stock that you can consider. The REIT owns 6 properties in Hangzhou, China.
Listed as well in 2016 at an IPO price of $0.81, the company is currently trading at $0.78 with a dividend yield of 7.6%. It’s trading below its book value with its P/B ratio at 0.83 and a market capitalisation of $606 million.
Know The Foreign Currency Exchange Rate Risk That You Are Facing
As investors, it’s important for us to recognise that while all these REITs are listed on SGX, their assets are based purely overseas, and not Singapore. This means that revenue they receive would be subjected to currency risk, be it the US Dollar, Euro, Australian Dollar or Chinese Yuan. That’s a currency risk that investors must be prepared for.
In our view, these REITs offer Singapore investors a more efficient method to diversify their property portfolio outside of Singapore, since they are professionally managed on behalf of shareholders. This makes more sense as compared to buying physical properties directly, and having to manage tenants on your own from Singapore.
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.