Decent dividend: Industrial REITS offer highest yield for investors

And Cache Logistics Trust offers one of the highest yields at 8.5% in FY11.

According to UOB Kayhian, the 7.5% dividend yield is significantly higher than the returns from fixed deposits, government bonds, telco shares or bank preference shares

Here’s more from UOB Kayhian:

What’s New

• The benchmark FSSTI opened 3.4% lower today following Wall Street’s worst sell-off since the global financial crisis. We revisit the REITs which offer a high-yielding defensive refuge to ride through the current market volatility.

Action

• Industrial logistics and suburban retail REITs most defensive. The relatively long leases of more than five years for the industrial REITs and the necessity spending in retail REITs exposed to the heartland malls lend them highly defensive characteristics.

• Our preferred picks for these segments are Cache Logistics Trust and Frasers Centrepoint Trust.

• Within the office sector, K-REIT is relatively more defensive due to its long weighted average lease term (WALE) of 7.2 years while Ascott Residence Trust’s high average length of stay of five months lends greater stability within the hospitality sector.

Essentials

• Industrial REITs offer high yields and long leases. Industrial REITs offer investors the highest yields among the various mainstream yield instruments. The 7.5% dividend yield is significantly higher than the returns from fixed deposits, government bonds, telco shares or bank preference shares. Industrial REITs also offer a 100-200bp premium over yields from office and retail REITs.

• Industrial REITs also have some of the longest WALE among the REITs as tenants tend to occupy whole buildings and after having invested heavily into capital equipment and machinery, do not shift premises easily. This is supported by the long master leases signed by tenants.

• Among the industrial REITs, we like Cache (Cache SP/BUY/Target: S$1.25) and Ascendas REIT (AREIT SP/BUY/Target: S$2.45) for their long WALEs, while Cache also offers one of the highest yields at 8.5% in FY11.

Photo credit: Comprale@Ancash

Also Read

One Sophia sells 30% of units at weekend launch

SLA launches tender to revitalise Tanjong Katong Complex

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit