The REIT sector appears to be seeing some light at the end of the tunnel as inflation eases and interest rates start to decline.
The US Federal Reserve cut interest rates by a full percentage point last year that should help to ease borrowing costs for REITs.
Income investors are on the lookout for defensive REITs that can stand strong despite these headwinds.
Diversified REITs, meaning those that own two or more property sub-classes, are in a better position as they are exposed to more than one property type.
Here are four diversified REITs sporting dividend yields of 5.2% or higher.
OUE REIT (SGX: TS0U)
OUE REIT owns a portfolio of six office, hospitality, and retail assets located in Singapore.
The REIT’s total assets under management (AUM) stood at S$5.8 billion as of 31 December 2024.
Revenue for 2024 rose 3.7% year on year to S$295.5 million but net property income (NPI) dipped by 0.4% year on year to S$234 million.
The fall was due to the upward revision of prior years’ property taxes for OUE REIT’s two hotels.
Distribution per unit (DPU) came in 1.4% lower at S$0.0206 versus S$0.0209 last year.
At a unit price of S$0.28, shares of OUE REIT offer a trailing distribution yield of 9.3%.
Both its office and retail segments saw high portfolio occupancy of 94.6% and 98.2%, respectively.
These segments also recorded positive rental reversions of 10.7% and 19.8%, respectively, for 2024.
Its hospitality segment saw year-on-year increases in revenue and NPI for 2024 and revenue per available room (RevPAR) grew 9.2% year on year to S$273.
The manager will focus on tenant retention and optimise occupancy while maintaining a prudent approach to capital management and funding.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
Mapletree Pan Asia Commercial Trust, or MPACT, owns a portfolio of 17 commercial and retail properties in Singapore (4), Hong Kong/China (3), Japan (9), and South Korea (1).
These properties have a total AUM of S$15.7 billion as of 31 December 2024.
MPACT reported a downbeat set of earnings for the first nine months of fiscal 2025 (9M FY2025) ending 31 December 2024.
Gross revenue fell 4.6% year on year to S$685.9 million, impacted by the divestment of Mapletree Anson and foreign currency headwinds caused by a strong Singapore dollar.
NPI slid 5.7% year on year to S$514 million while DPU tumbled 8.3% year on year to S$0.0607 due to higher finance costs.
The retail and commercial REIT’s trailing 12-month DPU came in at S$0.0836.
At a unit price of S$1.23, MPACT’s trailing 12-month distribution yield stood at 6.8%.
Portfolio committed occupancy was at 90% as of 31 December 2024 and registered a positive rental reversion of 4.6%.
MPACT’s two key retail assets, VivoCity and Festival Walk, logged year-on-year rises of 0.4% and 3%, respectively, for 9M FY2025.
However, tenant sales fell by 2.8% year on year for VivoCity and 9.3% year on year for Festival Walk. The decline was blamed on outbound travel.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with 21 properties in Singapore, two in Germany, and three in Australia.
CICT’s total AUM stood at S$26 billion as of 31 December 2024.
The REIT pulled off an admirable performance for 2024 with gross revenue inching up 1.7% year on year to S$1.59 billion.
NPI improved by 3.4% year on year to S$1.15 billion.
DPU for 2024 crept up 1.2% year on year to S$0.1088, giving CICT’s units a trailing distribution yield of 5.2% at a unit price of S$2.08.
The diversified REIT reported a high portfolio committed occupancy of 96.7% along with positive rental reversions of 8.8% and 11.1% for 2024, respectively, for its retail and office portfolios.
CICT also recently increased its exposure to downtown retail through the acquisition of a 50% stake in ION Orchard Mall.
Two asset enhancement initiatives (AEIs) for IMM Building and Gallileo are set to be completed in the second half of this year.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, is an industrial and commercial REIT with a portfolio of 114 properties across Singapore, the UK, Germany, Australia, and the Netherlands.
FLCT’s portfolio AUM stood at S$6.8 billion as of 31 December 2024.
The REIT reported a mixed result for its fiscal 2024 (FY2024) ending 30 September 2024.
Revenue rose 6.2% year on year to S$446.7 million while adjusted NPI increased by 2.7% year on year to S$320 million.
NPI, however, dipped by 3.4% year on year to S$0.068 because of higher finance costs from additional borrowings and elevated interest rates.
FLCT’s units offer a 7.7% trailing distribution yield at a unit price of S$0.885.
The REIT’s latest business update for the first quarter of fiscal 2025 (1Q FY2025) painted an encouraging picture.
The logistics & industrial segment saw an impressive positive rental reversion of 41.8%.
Aggregate leverage stayed low at just 36.2% with a trailing 3-month borrowing cost of 3.1%.
FLCT’s portfolio occupancy remained high at 94.3% with S$433 million of debt headroom for acquisitions before the REIT hits the 40% gearing level.
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Disclosure: Royston Yang owns shares of Frasers Logistics & Commercial Trust.
