REITs are a staple income-generating investment that has been around for nearly two decades.
Investors rely on them for a steady stream of dividends as they are mandated to pay out at least 90% of their earnings to enjoy tax benefits.
Of late, some REITs have been refreshing their portfolios with so-called “new economy” assets that can better withstand economic cycles.
Such assets include warehouses, industrial properties, logistics assets and data centres.
REITs such as CapitaLand China Trust (SGX: AU8U) have also pivoted to expand their investment mandate to include such new economy assets as part of their diversification strategy.
New economy properties have the advantage of sustained demand from digital services as the world moves towards a new normal.
If you’re looking for increased exposure to such assets, here are four REITs that contain new economy properties within their portfolios.
Daiwa House Logistics Trust (SGX: DHLU)
Daiwa House Logistics Trust, or DHLT, is a Japan-focused REIT with a portfolio of 14 logistics properties valued at S$952.9 million as of 30 June 2021.
The portfolio’s occupancy rate stood at a high of 96.3% as of 1 October 2021, and the properties have a weighted average lease expiry (WALE) of 7.2 years.
The tenants in the portfolio have not requested any rental relief throughout the pandemic, demonstrating the REIT’s rental income resilience.
DHLT also has a reputable sponsor in Daiwa House Industry (TYO: 1925), one of the largest construction and real estate companies in Japan.
The REIT also has 28 properties under a right-of-first-refusal (ROFR) with its sponsor, constituting a healthy pipeline that can be injected into the REIT in future.
Digital Core REIT (SGX: DCRU)
Digital Core REIT, or DCR, is a pure-play data centre REIT that owns a portfolio of 10 data centres in the US and Canada.
The REIT is only the second pure-play data centre REIT after Keppel DC REIT (SGX: AJBU), which was listed back in December 2014.
The REIT’s sponsor is Digital Realty Trust (NYSE: DLR), itself a REIT and the largest owner, operator and developer of data centres around the world.
DCR’s portfolio has a WALE of 6.2 years and boasts an occupancy rate of 100%.
Its tenants hail from the technology sector and consist of leading cloud providers, social media platforms and IT solutions providers.
Nearly all the leases have built-in rental escalation clauses of between 1% to 3%, allowing the REIT to enjoy organic rental income growth.
DCR also has a ROFR of US$15 billion worth of assets from Digital Realty Trust that can be injected as acquisitions in the future.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, is a REIT that owns a total of 103 industrial and commercial properties spread out over Singapore, the UK, Germany, Australia, and the Netherlands.
As of 30 September 2021, the portfolio was valued at S$7.3 billion.
Around 61% of the portfolio consists of logistics and industrial assets while another 21.5% comprises offices and business parks.
The portfolio’s WALE stands at 4.8 years and the occupancy rate remains high at 96.2%.
FLCT reported a good set of earnings for its fiscal year ended 30 September 2021.
Revenue surged by 41.4% year on year to S$469.3 million, aided by its merger with Frasers Commercial Trust.
Distribution per unit (DPU) rose by 7.9% year on year to S$0.0768. At the unit price of S$1.49, the REIT offers a trailing distribution yield of around 5.2%.
Aggregate leverage stands at 33.7%, providing the REIT with a debt headroom of close to S$2.5 billion for further yield-accretive acquisitions.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a diversified portfolio of 163 logistics properties located in eight countries as of 30 September 2021.
Assets under management stood at S$10.8 billion.
The portfolio’s occupancy rate was high at 97.8% with a WALE of 3.7 years by net lettable area.
The REIT enjoyed a positive average rental reversion of 2.4% for the quarter.
For its fiscal 2022 first half (1H2022), the REIT reported a 24.4% year on year jump in gross revenue to S$328.8 million.
Net property income increased by 21.4% year on year while DPU inched up by 5.7% year on year to S$0.04334.
Annualised distribution yield based on a unit price of S$1.84 stood at 4.7%.
The REIT’s gearing ratio stood at 38.2% as of 30 September 2021 with an interest coverage ratio of 5.2 times.
MLT remains active on the acquisitions front.
In 1H2022, it announced the acquisition of 9 Changi South Street 2 in Singapore and two cold storage facilities in Melbourne, Australia.
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Disclaimer: Royston Yang owns shares of Digital Core REIT, Keppel DC REIT and Frasers Logistics & Commercial Trust.
