Image credit: CapitaLand Ascendas REIT
Investing in real estate investment trusts (REITs) can be a great way to diversify your portfolio and generate passive income. One such reputable REIT is CapitaLand Ascendas REIT (CLAR, SGX:A17U). Backed by CapitaLand Investment Limited, CLAR is not only the first and largest industrial REIT in Singapore but also a constituent of the Straits Times Index (STI), Singapore's blue-chip benchmark index.
Overview: Largest Industrial REIT in Singapore
CLAR boasts a diversified portfolio comprising 228 properties across Singapore, Australia, the US, and the UK/Europe. The REIT operates in three key segments: business space and life sciences, logistics, industrial, and data centers. With an investment property value of S$16.5 billion as of September 2022, CLAR is undoubtedly the largest industrial REIT in Singapore.
Source: CLAR 3Q2022 Business Update
Highly Diversified Portfolio
One of CLAR's strengths lies in its highly diversified portfolio. While about 61% of its investment properties are based in Singapore, the REIT constantly strives to expand its overseas assets for greater resilience. By acquiring properties in developed markets such as the US, UK, Europe, and Australia, CLAR is able to tap into different market trends and growth opportunities.
Source: CLAR 3Q2022 Business Update
Prudent Capital Management
Concerns about rising interest rates can impact the performance of REITs. However, CLAR has taken proactive measures to mitigate higher financing costs. With 78% of its loans hedged to fixed rates, the REIT has effectively reduced its exposure to interest rate fluctuations. Furthermore, CLAR's debt maturity profile is well spread out to avoid any undue risks.
Source: CLAR 3Q2022 Business Update
High Portfolio Occupancy
Maintaining a high portfolio occupancy rate is crucial for any REIT, and CLAR excels in this regard. With a portfolio occupancy rate of 94.5% as of September 2022, the REIT has consistently outperformed the industrial average. Additionally, CLAR's portfolio boasts a relatively long weighted average lease expiry (WALE) of 3.9 years, providing stability and security for investors.
Source: CLAR 3Q2022 Business Update
Potential Tailwinds
Apart from its solid foundation, CLAR has several potential tailwinds that make it an attractive investment option. The recent acquisition of a cold storage logistics facility in Singapore presents exciting rental growth potential due to the limited supply of quality cold storage facilities in the country. Furthermore, CLAR's acquisition of a high-tech campus that serves as Philips' APAC headquarters and innovation center strengthens its technology and biomedical customer base.
REIT Dividend Yield and Analyst Ratings
CLAR offers an attractive trailing twelve-month dividend yield of 5.9%. According to SGX StockFacts, the REIT has a consensus rating of "outperform" and a price target of $3.195, which indicates an 18% upside potential from its last traded price. These positive ratings reflect the confidence that analysts have in the REIT's performance.
Source: SGX StockFacts, as of November 2, 2022
How to Invest in CapitaLand Ascendas REIT (CLAR): SGX A17U
Investing in CLAR is simple and accessible. You can choose to invest through a brokerage platform like Syfe Trade or opt for a managed portfolio like Syfe REIT+. Syfe Trade offers low-cost Singapore stock investing with pricing as low as 0.06% of the traded value. On the other hand, Syfe REIT+ provides a diversified portfolio by holding 20 of Singapore's top REITs, with CLAR being one of the largest holdings.
Whether you choose Syfe Trade or Syfe REIT+, getting started with Syfe is easy. Simply download the Syfe app, create an account with Singpass, and you'll be on your way to investing in CLAR.
Disclaimer: This article is for informational purposes only and should not be viewed as financial advice. It is not meant to market any specific investment or offer or recommend the purchase or sale of any specific security. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.
