SINGAPORE (Aug 22): Over the past five years, as many 15 trusts – comprising 10 real estate investment trusts (REITs) and stapled trusts – have listed on the Singapore Exchange (SGX) to make up about one quarter of the combined market capitalisation of listed REITs and stapled trusts in Singapore.

These trusts invest in property assets spanning hotels, shopping centres, office towers, industrial parks as well as high-tech and e-commerce facilities.

In the weekly newsletter by SGX Gateway, market strategist Geoff Howie notes that all of the 15 trusts have generated dividend-inclusive gains in the 2017 year to date (YTD), which outpaced the Straits Times Index (STI) on average, with average total returns of 17.5%.

Combined, all of Singapore’s 37 REITs and stapled trusts with investments in property assets averaged an 18% total return in the year thus far.

“Following the establishment of REITs in Singapore in 2002, they [the 37 REITs and stapled trusts] now make up one-tenth of the 30 STI constituents and three of the five STI reserve stocks. Like the broader group of REITs listed on SGX, the 15 most recent trusts to be listed on SGX have on average been less volatile than the STI over the past 12 months,” says the strategist.

He adds that it is these 15 trusts which have also averaged an indicative dividend yield of 6.8% over the past 12 months, which is twice that of the STI – which suggests the 15 REITs paid out an average of $680 in annual distributions for every $10,000 invested.

Notably, the highest indicative distribution yields among these 15 most recently-listed trusts are maintained by Soilbuild Business Space REIT, Viva Industrial Trust (VIT) and iREIT Global, which have the highest indicative dividend yields of 8.3%, 7.9% and 7.9% respectively.

While Soilbuild REIT has generated a total return of 19.4% YTD, the latter two trusts have generated respective total returns of 29.6% and 15.8%.

Howie nonetheless cautions that REITs carry market risk as do stocks, as their unit prices can move against investor expectations.

“Other risks associated with a REIT investment can vary and depend on the unique characteristics of each REIT, as well as the geographical location and quality of the underlying property investments and other risks associated with stock investing such as price risk, volatility and liquidity risks,” he warns.

As at 10.50am, units in Soilbuild REIT, VIT and IREIT Global are trading at 71 cents, 92 cents and 77 cents respectively.