The REIT sector could be seeing better days ahead.
In the past two years, REITs have suffered as surging interest rates and elevated inflation crimped their distributable income.
As a result, many REITs ended up reporting lower distributions.
Interest rates could be heading lower in due course while inflation is also easing.
We singled out three resilient Singapore REITs that weathered the headwinds well and are providing a good distribution yield.
What’s more, these REITs also have the potential to increase their distributions over time.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and one in Japan.
The REIT’s assets under management (AUM) stood at S$8.9 billion as of 30 September 2024.
MIT reported a robust set of earnings for the first half of fiscal 2025 (1H FY2025) ending 30 September 2024.
Revenue rose 3.5% year on year to S$356.7 million while net property income (NPI) increased by 2.9% year on year to S$267 million.
The REIT’s distribution per unit (DPU) inched up 1.3% year on year to S$0.068.
MIT’s trailing 12-month DPU stood at S$0.1352, giving its units a trailing distribution yield of 6%.
The industrial REIT has seen borrowing costs ease, with finance expenses edging up just 1% year on year for 1H FY2025.
MIT also boasts a high portfolio occupancy of 92.9% with a long weighted average lease expiry (WALE) of 4.4 years by gross rental income (GRI).
Importantly, the REIT enjoyed a positive rental reversion of 10.7% across its renewal leases, alluding to the strong demand for properties within its portfolio.
MIT looks well-positioned to deliver higher DPU.
Its NPI will be driven by contributions from its newly acquired Osaka data centre.
The REIT also recently completed the acquisition of a freehold property with redevelopment potential into a new data centre.
This property offers good value creation potential as data centre demand is projected to grow 9.3% annually from 2023 to 2033.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 64 properties comprising three hospitals in Singapore, 60 nursing homes in Japan, and a medical centre in Malaysia.
The total appraised value of these properties is S$2.2 billion as of 30 September 2024.
The healthcare REIT has the enviable reputation of reporting uninterrupted recurring DPU growth since its IPO In 2007.
Its latest earnings release was no exception.
PLife REIT reported a mixed performance for the first nine months of 2024 (9M 2024).
Revenue and NPI fell by 2.2% and 2.1%, respectively, to S$108.5 million and S$102.4 million principally because of a weaker Japanese Yen.
However, DPU managed to rise by 2.8% year on year to S$0.113.
PLife REIT’s trailing 12-month DPU came in at S$0.1508, giving its units a trailing distribution yield of 4.2%.
There could be more to come from the healthcare REIT as it announced a major acquisition of 11 nursing homes in France in late October.
This purchase has opened the REIT up to a new third-key market to help it continue growing.
The acquisition is also DPU-accretive with the first half of 2024’s DPU projected to grow by 1.8% to S$0.0768.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 properties in Singapore, two properties in Germany, and three in Australia.
The REIT’s AUM stood at S$24.5 billion as of 31 December 2023.
CICT was one of the few REITs that posted a year-on-year DPU increase despite ongoing headwinds.
For the first half of 2024 (1H 2024), DPU rose 2.5% year on year to S$0.0543 on the back of a 2.2% year-on-year increase in gross revenue.
Based on 1H 2024’s DPU, CICT’s trailing 12-month DPU stands at S$0.1088, giving the retail and commercial REIT a trailing distribution yield of 5.5%.
CICT reported an upbeat business update for the third quarter of 2024 (3Q 2024) and 9M 2024.
Gross revenue inched up 2% year on year to S$1.2 billion with NPI increasing by 5.4% year on year to S$872.1 million.
Portfolio committed occupancy was high at 96.4% with a stable portfolio WALE of 3.5 years.
CICT also reported strong positive rental reversions of 9.2% for its retail portfolio and 11.7% for its commercial portfolio.
There could be more to come in terms of DPU growth.
DPU should be boosted by the REIT’s robust financial showing and positive rental reversions.
CICT is also engaged in two asset enhancement initiatives – one of its IMM Building in Singapore and the other at Gallileo in Germany.
The REIT has also completed the acquisition of a 50% stake in ION Orchard Mall that is DPU-accretive.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.
