Anthony Lee, 50, is a secondary school teacher who earns $6,500 a month and takes home $5,200 after his CPF contribution. He has $85,000 in his CPF Ordinary Account and wants some of it to earn more than the account pays. A Singapore real estate investment trust (REIT) he follows fell from $1.00 to $0.80 a unit this year, and a stock screener now shows its yield at 7.5%.
REITs are usually compared by that one number, the distribution yield. It divides last year's distribution by today's price. According to the Inland Revenue Authority of Singapore (IRAS), a REIT must distribute at least 90% of its taxable income to keep its tax treatment, so the distribution is most of what a unitholder receives.
Anthony's REIT paid 6 cents a unit over the past twelve months, and 6 ÷ 80 = 7.5%. The same 6 cents showed as 6% when the price was $1.00. The sections below follow his checks on the figures the REIT's own reports show and the yield does not.
How Is A REIT's Yield Calculated?
The distribution yield is the distribution per unit (DPU) over the past twelve months divided by the unit price. A REIT with a DPU of 6 cents and a price of $1.00 yields 6 ÷ 100 = 6%.
| DPU over twelve months | Unit price | Distribution yield |
|---|---|---|
| 6.0 cents | $1.20 | 5.0% |
| 6.0 cents | $1.00 | 6.0% |
| 6.0 cents (Anthony's REIT today) | $0.80 | 7.5% |
| 4.8 cents | $0.80 | 6.0% |
Source: Example figures
The third row shows a 7.5% yield after a price fall with no change in the distribution. The fourth row shows the same REIT after a 20% cut to the distribution, with 6.0 × 0.8 = 4.8 cents. If Anthony buys at $0.80 expecting 7.5% and the cut follows, he receives 6.0%.
How Are His Distributions Taxed?
Under the IRAS e-Tax Guide on REITs (checked 30 September 2026), a REIT that distributes at least 90% of its taxable income in the year it is earned is not taxed on the income distributed. IRAS exempts REIT distributions received by individuals, unless they come through a partnership in Singapore or from a trade or business in REITs.
Anthony holds as an individual, so his distributions are tax-free. Because of the 90% rule, a REIT keeps little cash back, and it pays for new properties by borrowing or by issuing new units.
Read Also: How Investment Income Is Taxed In Singapore In 2026
How Much Can A REIT Borrow?
The Monetary Authority of Singapore (MAS) revised the borrowing rules in its Code on Collective Investment Schemes on 28 November 2024 (checked 30 September 2026). All REITs now face:
- A single borrowing limit of 50% of the REIT's deposited property
- A minimum interest coverage ratio (ICR) of 1.5 times
- Additional disclosure, with a plan to improve the ICR, when it falls below 1.8 times
The borrowing ratio, often called gearing, is borrowings as a share of total assets. The ICR is earnings before interest divided by interest paid, so an ICR of 1.5 times means earnings are one and a half times the interest bill. Both figures are in every REIT's results announcement, and Anthony reads them there before he looks at the yield again.
What Happens When A REIT Refinances?
A REIT's loans run for a few years and are then refinanced at the rates of the day. The example below is a REIT with $1 billion of property, a 40% gearing ratio and $60 million of income before interest.
| $1 billion REIT, $400 million of debt | Before refinancing | After refinancing |
|---|---|---|
| Interest rate on debt | 3.0% | 4.5% |
| Interest a year | $12 million | $18 million |
| Income after interest | $48 million | $42 million |
| Interest coverage ratio | 5.0 times | 3.3 times |
Source: Example figures
A 1.5 percentage point rise in the interest rate cuts income after interest from $48 million to $42 million, a fall of $6 million or 12.5%. The distribution falls by about the same share. On Anthony's REIT, a 12.5% cut would take the DPU from 6 cents to 5.25 cents, and his yield at $0.80 from 7.5% to about 6.6%.
What Else Does The Yield Not Show?
Four other figures in a REIT's reports affect what a unitholder receives:
- A price below the net asset value per unit can reflect doubts about property values or the distribution.
- Management fees paid in new units increase the number of units the distribution is shared across.
- Rights issues and placements that buy properties below the existing yield reduce the DPU.
- A REIT with overseas properties earns in foreign currency and pays in Singapore dollars, so exchange rates move the DPU.
Distributions can also include gains from selling a property or a return of capital. The REIT states the parts of each distribution in its announcement, and a one-off gain does not recur. Anthony checks that his REIT's last 6 cents came from rental income.
How Does 7.5% Compare With A Government Bond And His CPF?
The latest 10-year Singapore Government Securities bond in the MAS issuance calendar, NZ16100X, was reopened at auction on 27 August 2026 at a cut-off yield of 2.30%, according to MAS (checked 30 September 2026). A REIT yielding 6% pays 3.70 percentage points a year more than that bond, and Anthony's 7.5% pays 5.20 points more, in return for the risks above and a price that can fall.
CPF members can buy SGX-listed REITs with Ordinary Account savings above $20,000 under the CPF Investment Scheme (CPFIS). Anthony's $85,000 leaves $65,000 he can invest. The CPF Board pays 2.5% a year on the Ordinary Account, so a REIT bought with that money has to beat 2.5% after costs, with the capital at risk.
Read Also: CPFIS: Limits, Fees And The 2.5% Return To Beat
Read Also: Track Your REITs Alongside Your Other Holdings In Cashmere Pocket
How Much Did Anthony Buy?
Anthony bought 20,000 units at $0.80, or $16,000 of his Ordinary Account savings. At 6 cents a unit, they pay 20,000 × $0.06 = $1,200 a year, against the $400 that $16,000 earns at 2.5% in the account. After a 20% cut, the units would pay 20,000 × $0.048 = $960, which is still above $400, and he kept the rest of his savings in the Ordinary Account.
REITs suit investors who want regular, tax-free distributions and can hold through price falls and occasional cuts to the distribution. Gearing, ICR, debt maturities and the share of income from one-off gains show more about the next distribution than the yield does. How much of a portfolio goes into REITs depends on each investor's income needs, horizon and existing exposure to property.