Business Times Just Published that REITs are Good Investments Well It is True but No One Dares to Say....

Business Times (Singapore) has published an opinion piece that choosing REITs over an investment home may be better

*Article requires subscription so might be hard to read in full.

Well as I had covered investing in REITs, REIT give much better returns than owning a property. I have done the maths here

In short, choosing the right REIT will yield good returns. In fact for my favourite REIT (United Hampshire US REIT), without leverage it is giving 8% dividend yield and on equity.

A Challenge to A Property Agent

I am willing to challenge an agent out there based on a condo project which has: 

(i) more than 100 residential units in the project, 

(ii) pricing based on latest URA pricing for condo sold (for capital gains), 

(iii) rental income based on URA rental for a transaction in the condo project; and deducting (a) annual IRAS non owner occupied property tax rate from effective 1 Jan 2025 based on annual value=Rental multiply 12 months; (b) 0.5 months agent commission annually and (c) loan expense of 4% annual interest on the 50% leverage) based on a 50% cash/50% leverage model for the condo. 

To give any property agent the advantage, I will not use a 50% cash/50% leverage model for Unitedhampshire US REIT (Phillips Securities provide loan of only 4.5% interest) but I am confident with this model, I will trash any property agent, hence I will make it nice and peg it to a 100% cash only model for buying United Hampshire US REIT (over a 5 year period), where UnitedHampshire US REIT purchased share price is 45.5 US cents based on today's pricing. Returns for Utdhampshire US REIT will be based on any capital gains + dividend over 05 years.

Time period: Ends on 31 Dec 2029

I am quite confident my pick of the REIT will surpass the returns of Singapore condo property

Top Dividend Stocks For 2025: Singapore SGX Stocks

While I would have recommended Hong Kong stocks such as LINK REIT due to its low leverage and yet high dividend yield; same as what i did in my for August 2024, this article is written for individuals who only invest within the Singapore Market. Below are a few companies which I view should garner good dividends for 2025.

The proof is in the pudding and a caveat that I own 2 of the 3 below stocks; I will not be putting them into my portfolio if they are not dividend giants.

Most of them are REITs and with the recent change in regulatory limits, these REITs are now very safe (higher ICR and lower leverage than regulatory requirements)

1) UnitedHampshire US REIT (Listed in Singapore)

A US REIT which operates Striple malls in the East Area of USA, with the low supply of stripe malls in USA, Utd Hampshire REIT will continue to have a high occupancy rate. For context, stripe malls are essential malls in neighbourhoods. They are built more for neccessity than luxury needs like the malls we have. If we think of it in a Singapore context, Unitedhampshire operates malls which houses NTUC/Sheng Shiong or kopitiam and less on shops such as Godiva or Zara. Similar to what we see in HDB heartlands.

The REIT contracts has built in rental growth annually. Its cost of debt has now stabilised. With property revenue having built in annual escalations, I forsee the REIT will increase in yield to about 10% based on its current share price.

The REIT has been actively divesting assets at above book value and buying new ones. This shows they are doing positive asset recycling. The REIT's leverage ratio is below 40% with the recent sale of a retail mall at above book valuation. With MAS increasing the leverage limit to 50%, Utdhampshire REIT is relatively safe. Dividend yields can be assured and it should be a 9% yielder for any would be investor.

At NAV of 72 US cents vs share price of 45 US cents, it is attractively priced.

2) Yangzijiang Financial (Listed in Singapore)

Its earnings has been consistent and therefore dividends given is around 6% yield at current price of 40 sg cents.

In recent times, the company has been deploying its spare cash to do share buybacks at 40 sg cents. It shows some degree of undervalue.

It is a fund management company with debt investments in China and Singapore. With 30% net cash and NAV of 111 cents, at 40 cents this company is a steal. An icing on the cake is that it does not use debt to do investments.

Hence an unlevered 6% yield is world beating.

3) ELITE UK REIT (Listed in Singapore)

Due to decreasing UK borrowing cost, the REIT has reported an increase in distribution putting it in the 9% yield category as well.

Its main tenant is the UK government which ensures revenue stability. In terms of gearing, the REIT is at 43%. Elite has an interest coverage ratio of 3 times. It passes up all MAS's regulatory requirements. The REIT has a few vacant buildings where one it is planning to do AEI to re purpose it for data centre purposes. When successful, the company should earn extra property income. I do expect the REIT to be a 10% dividend yielder as time progresses.

Notable Mention

Due to the relaxation in MAS's regulatory rules, I forsee PRIME US REIT would restart their dividend. The REIT could be another 8-9% dividend yielder at its current price of 16.4 US cents.