REITs are perfect for an investor who is looking for a steady stream of passive income.
Their ability to pay out consistent dividends makes them suitable for investors seeking an additional source of income.
In recent months, persistently high inflation has led to the US Federal Reserve hiking interest rates at a pace not seen in decades.
The higher interest rate environment has dampened demand for REITs, causing many to fall to their 52-week lows.
Their distribution yields have also increased as their unit prices decline.
You should carefully study each REIT’s attributes to ensure you are not walking into a value trap.
Here are four high-yielding REITs trading at a year low that you may want to add to your buy watchlist.
iREIT Global
iREIT Global invests in office, retail and industrial properties in Europe, and its portfolio comprises a total of 37 properties.
The REIT’s portfolio consists of five freehold office properties in Germany, five in Spain and 27 freehold retail properties in France.
iREIT Global’s unit price has fallen 21.5% in the last year, touching close to its 52-week low of S$0.50.
For the REIT’s fiscal 2022’s first half (1H2022), it reported a 27.2% year on year jump in gross revenue to €30.1 million.
Net property income (NPI) rose 26.4% year on year to €24.4 million.
Distribution per unit (DPU) after retention came up to €0.0141, dipping slightly below the €0.0143 paid out a year ago.
iREIT Global’s units provide a forward distribution yield of 7.3%.
The REIT’s aggregate leverage stood at 30.8% as of 30 June 2022 with a low cost of borrowings of 1.8%, allowing it sufficient debt headroom for acquisitions.
United Hampshire US REIT
United Hampshire US REIT, or UHREIT, invests in a portfolio of grocery-anchored and necessity-based properties in the US.
Its portfolio comprises 21 grocery and necessity properties as well as two self-storage properties.
UHREIT’s unit price has tumbled 13.2% in the past year and is hovering close to its 52-week low of US$0.58.
For 1H2022, the REIT reported an 18.5% year on year rise in gross revenue to US$31.8 million and a 10.6% year on year increase in NPI to US$22.6 million.
DPU, however, fell by 4.6% year on year to US$0.0291.
Adjusted DPU, which excludes the effects of top-ups and stipulated damages, increased by 13.4% year on year to US$0.0288.
Annualised 1H2022 DPU stands at US$0.0582, giving UHREIT’s units a forward distribution yield of 9.9%.
UHREIT had just concluded the divestment of two self-storage properties at a 17.7% premium over their purchase price, and also made its third yield-accretive acquisition of Upland Square to boost its portfolio size to US$732.9 million.
Elite Commercial REIT
Elite Commercial REIT owns a portfolio of 155 predominantly freehold buildings across the UK that are primarily occupied by the Department for Work and Pensions (DWP), the UK’s largest public service department.
Elite’s unit price has declined from £0.67 to a 52-week low of £0.56, a drop of 16.4%.
1H2022 saw revenue rise 17.7% year on year to £18.7 million due to contributions from Elite’s maiden acquisition of 58 properties in March last year.
DPU, however, dipped by 2.7% year on year to £0.0256.
Units of the commercial REIT offer a prospective distribution yield of 9.1%.
All leases for the properties within the portfolio are on a triple-net basis, and the bulk of the properties have a built-in inflation-linked rent uplift clause.
Elite’s borrowing cost remained low at 2.3% with 63% of its debt on fixed rates. The gearing level, however, was fairly high at 41.9%.
Manulife US REIT
Manulife US REIT, or MUST, is a US office REIT that owns a portfolio of 12 freehold office properties across seven US states worth US$2.2 billion as of 31 December 2021.
MUST’s unit price has fallen by 31% from US$0.71 a year ago to a 52-week low of US$0.48.
Gross revenue for 1H2022 rose 10.6% year on year to US$100.4 million while NPI inched up 2.8% year on year to US$57.6 million.
DPU, however, saw a 3.3% year on year decline to US$0.0261.
MUST’s units provide a forward distribution yield of 10.9% based on the annualised DPU of US$0.0522.
The REIT’s gearing stood at 42.4% as of 30 June 2022 with an average interest rate of 2.97%.
Close to 86% of the REIT’s borrowings are on fixed rates, thus acting as a mitigating factor against any potential increase in interest rates.
Around two-thirds of MUST’s portfolio have annual rental escalations of 2.7%, with another 27.8% enjoying periodic escalations.