The REIT sector may have come under pressure this year, but there are still gems to be found amid the wreckage.
These REITs may not always post higher distributions but they sport solid operating metrics and possess a strong sponsor.
Armed with these advantages, income investors feel assured that these REITs can tide through the current environment of higher interest rates.
It is also a great idea to single out which REITs you plan to buy should the market crash suddenly.
Here are three Singapore REITs on my buy watchlist the next time the market dives.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 63 properties with assets under management (AUM) of S$2.2 billion.
The REIT owns three hospitals in Singapore, 59 nursing homes in Japan, and a strata-titled building in Kuala Lumpur, Malaysia.
PLife REIT has a strong sponsor in IHH Healthcare Berhad (SGX: Q0F), an integrated healthcare player with over 80 hospitals in 10 countries.
The healthcare REIT has an enviable track record of uninterrupted increases in its core distribution per unit (DPU) since its IPO in 2007.
For the first quarter of 2024 (1Q 2024), PLife REIT saw its revenue dip by 2.7% year on year to S$36.3 million.
Net property income (NPI) also fell by 2.8% year on year to S$34.3 million.
However, DPU rose 4% year on year to S$0.0379.
PLife REIT intends to leverage its first-mover advantage and strong network in Japan to expand through acquisitions.
At the same time, the healthcare REIT is looking to build a third key market that can help the REIT to grow in the mid to long term.
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 in Germany, and three in Australia.
CICT’s AUM stood at S$24.5 billion as of 31 December 2023.
The REIT has a reputable sponsor in CapitaLand Investment Limited (SGX: 9CI) which had S$133 billion of AUM and S$90 billion of funds under management as of 30 September 2023.
CICT reported an admirable performance for 2023 with revenue rising by 8.2% year on year to S$1.6 billion.
NPI improved by 7% year on year to S$1.1 billion and the REIT saw its DPU inch up 1.6% year on year to S$0.1075.
For 1Q 2024, the REIT has continued its momentum by reporting a 2.6% year-on-year increase in gross revenue to S$398.6 million.
NPI jumped 6.3% year on year to S$293.7 million.
CICT’s portfolio saw a high committed occupancy level of 97% and both its retail and commercial divisions reported positive rental reversions of 7.2% and 14.1%, respectively.
The REIT has also undertaken asset enhancement initiatives (AEIs) on the IMM Building in Singapore and Gallileo in Frankfurt.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building.
FCT is the largest suburban retail mall owner with an AUM of S$7.1 billion.
The REIT has a strong sponsor in Frasers Property Limited (SGX: TQ5), an investor, developer, and manager of real estate assets with an AUM of around S$40.1 billion as of 31 March 2024.
For the first half of fiscal 2024 (1H FY2024) ending 31 March 2024, FCT reported a 7.2% year-on-year dip in revenue to S$172.2 million.
Its NPI also fell by 8.4% year on year to S$124.6 million.
The decline was because of the divestment of Changi City Point in October 2023 and ongoing AEI works at Tampines 1 Mall.
Excluding these effects, FCT’s revenue and NPI would have risen by 2.9% and 2.1% year on year, respectively.
The retail REIT sported a very high committed occupancy rate of 99.9% as of 31 March 2024.
Rental reversion was also strong at a positive 7.5%, an improvement over the prior period’s positive 4.3%.
Both shopper traffic and tenant sales continued to climb.
For the second quarter of FY2024, shopper traffic increased by 8.1% year on year while tenant sales edged up 4.3% year on year.
FCT had just completed the acquisition of an additional 24.5% stake in NEX Mall in Serangoon back in March 2024, taking its effective stake to 49%.
For the Tampines 1 AEI, the REIT has secured more than 99% leasing commitment to date and works are expected to be completed by September 2024.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
