The REIT sector appears to be on the mend.
With interest rates poised to head lower by the end of this year and inflation easing, REITs should enjoy some respite from the challenges faced in the last three years.
Many are not standing still, however.
Several REITs have announced corporate actions, acquisitions, and divestments to rejig their portfolios.
Here are three REITs you can watch out for this month.
CapitaLand China Trust (SGX: AU8U)
CapitaLand China Trust, or CLCT, is a China-focused REIT with a portfolio of nine shopping malls, five business park properties, and four logistics park properties.
These properties were valued at around RMB 23.9 billion as of 31 December 2024.
Earlier last month, CLCT announced that it will be a joint strategic investor along with CapitaLand Mall Asia Limited (CMA) and CapitaLand China Holdings Pte Ltd (CLD).
CLCT will sell CapitaMall Yuhuating, a Chinese shopping mall within its portfolio, to a new REIT, CapitaLand Commercial C-REIT (CLCR), to seed the latter’s initial portfolio.
At the same time, CLCT will also subscribe for a 5% stake in CLCR.
The proceeds will be used to pay existing debts, repurchase units of CLCT, or for general working capital purposes.
Through this transaction, CLCT’s manager hopes to unlock the value of a mature retail asset and recycle the capital into new, promising assets.
With the proceeds possibly used to pay down debt, this move will strengthen CLCT’s balance sheet by reducing leverage. Note that gearing stood at 42.6% as of 31 March 2025.
By subscribing for a stake in CLCR, CLCT will also gain upside potential from the listing of a Chinese REIT.
Post-transaction, the retail portion will make up around 75.4% of CLCT’s assets under management (AUM), down from 76.4%.
Assuming all proceeds are used to pare down debt, aggregate leverage will fall to 41.4%.
The average share price increase of consumption-related Chinese REITs post-IPO is over 50%, thus providing CLCT with investment appreciation potential.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, owns a diversified portfolio of industrial properties with an AUM of S$9.1 billion as of 31 March 2025.
The REIT’s properties are spread across Singapore (83), the US (56), and Japan (2).
Back in May, MIT announced the sale of three industrial properties in Singapore for a total consideration of S$535.3 million to Brookfield Asset Management (NYSE: BAM).
The three properties are The Strategy, The Synergy, and the Woodlands Central Cluster.
The sale price is at a 2.6% premium over the independent valuations of this group of properties.
This divestment will help to strengthen MIT’s capital structure and enhance the REIT’s financial flexibility for future investments.
It will also help to realise the value of the capital appreciation for these properties.
Assuming the net proceeds of S$516 million are utilised to repay debt, MIT’s pro forma aggregate leverage will fall from 40.1% to 37%, offering it more debt headroom.
Pro forma interest coverage ratio (ICR) will also improve from 4.3 times to 5.1 times.
The divestment amount is also 22.1% higher than the properties’ original investment cost.
Post-divestment, MIT’s distribution per unit is expected to decline to S$0.1327 from S$0.1357.
Net asset value, however, will rise slightly from S$1.71 to S$1.72 while the portfolio’s overall occupancy will inch up from 91.6% to 92%.
Elite UK REIT (SGX: MXNU)
Elite UK REIT’s portfolio comprises freehold properties in the UK located in town centres, and is near transportation nodes and amenities.
As of 31 December 2024, Elite UK REIT’s portfolio had an AUM of around £416 million.
Earlier last month, the REIT acquired three government-leased properties for £9.2 million.
These properties are fully occupied, and the purchase was done at a 7.6% discount to average independent valuations.
The leases are on a triple-net basis with a long weighted average lease expiry (WALE) of 7.4 years.
The three properties have an attractive blended gross rental income yield of 9.2% and will bring in portfolio diversification benefits as a new tenant will be introduced.
The acquisition will improve the portfolio’s WALE and strengthen the REIT’s counter-cyclical revenue stream.
DPU is expected to improve slightly post-acquisition, going from £0.0287 to £0.02888.
Elite UK REIT’s portfolio valuation will also increase to £424.8 million (current: £415.6 million) while aggregate leverage will dip from 43.4% to 43.2%.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.
