By MoneyBees
Work out a Singapore REIT's distribution yield from its distribution per unit and the unit price, your yearly and monthly payout, your yield on cost, and the price that gives your target yield. Check the REIT's gearing and interest cover against MAS's current limits.
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From the REIT's latest results
Distribution yield
5.00%
S$0.0500 a year on S$1.000
Your payout a year
$500.00
about $41.67 a month, tax free
Yield on what you paid
4.00%
price for 6%: S$0.833
Yield is the distribution for a year divided by the unit price. Your half-year 2.5 cents is 5.00 cents a year, if the REIT keeps paying the same. When the price falls the yield rises, and the other way round.
Gearing of 40% leaves 10.0 points to MAS's 50% limit, with interest cover above 1.8 times.
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| Period | Gearing limit | Interest cover |
|---|---|---|
| 16 Apr 2020 to 31 Dec 2021 | 50% | No minimum |
| 1 Jan 2022 to 27 Nov 2024 | 45%, or up to 50% with cover of 2.5 times | 2.5 times to go above 45% |
| From 28 Nov 2024 | 50% for all REITs | At least 1.5 times; disclose plans below 1.8 times |
Gearing is total borrowings and deferred payments over the REIT's deposited property. Interest cover is trailing 12-month EBITDA over interest, loan fees and hybrid distributions.
A REIT pays 2.5 cents a unit each half year, 5 cents a year. At S$1.00 a unit that is a 5% yield. If you bought at S$1.25, your yield on cost is 4%. With 10,000 units you receive S$500 a year. For a 6% yield the price would have to fall to about S$0.833.
Individuals pay no tax on distributions from Singapore REITs, unless they receive them through a partnership in Singapore or as part of a trade or business. Foreign companies and other non-individuals that qualify have 10% withheld as a final tax, a rate extended to 31 Dec 2030.
Some distributions are a return of capital, paid from cash flow or revaluation gains rather than taxable income. MoneyBees names no REIT and does not recommend one.
Divide the distribution per unit for a year by the unit price. A REIT paying 5 cents a year at S$1.00 a unit yields 5%. If it pays half-yearly or quarterly, add up the payouts for the year first.
The yearly distribution divided by the price you paid, not today's price. It tells you what your own money is earning.
Individuals pay no tax on distributions from Singapore REITs, unless they receive them through a partnership in Singapore or from a trade, business or profession.
Qualifying foreign non-individuals have 10% withheld as a final tax on REIT distributions, a rate that runs to 31 Dec 2030. Individuals, local or foreign, are exempt.
Since 28 Nov 2024, gearing (aggregate leverage) must not exceed 50% of the REIT's deposited property, and the REIT must keep an interest coverage ratio of at least 1.5 times.
From 1 Jan 2022 to 27 Nov 2024, REITs could borrow up to 45%, or up to 50% only with an interest coverage ratio of at least 2.5 times. MAS replaced it with the single 50% limit.
MAS expects the manager to take steps to improve it and disclose its plans. Below 1.5 times the REIT is under the MAS minimum.
Yield rises when the unit price falls, which can reflect expected cuts to distributions. Look at the distribution history, gearing and interest cover as well.
These calculators provide general estimates for educational purposes only and are not personalised financial advice. Results may rely on rates and rules that change over time, so verify against official sources (IRAS, CPF Board, HDB, MAS) or consult a licensed financial adviser before making decisions.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).