The industrial sub-sector is one of the most resilient within the REIT industry.
A boom in e-commerce has resulted in surging demand for logistics facilities, warehouses, and industrial buildings.
An income investor who is seeking steady distributions can look at the industrial space for suitable investment ideas.
We feature four Singapore industrial REITs that sport distribution yields of 6.6% or higher.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, owns a diversified portfolio of 28 industrial properties in Singapore (25) and Australia (3).
AAREIT reported an encouraging set of earnings for its fiscal 2024 (FY2024) ending 31 March 2024.
Revenue increased 5.9% year on year to S$177.3 million while net property income (NPI) improved by 6.9% year on year to S$131 million.
The better results were attributed to higher occupancy along with strong positive rental reversions and high tenant retention rates.
Distribution per unit (DPU), however, dipped by nearly 6% year on year to S$0.0936 because of an 11.8% year-on-year jump in the REIT’s issued unit base due to last year’s equity fundraising.
Units of AAREIT offer a trailing distribution yield of 7.4%.
The good news is that portfolio occupancy stood high at 97.8% while full-year rental reversion came in at 24.3%, higher than the previous year’s 18.5%.
The industrial REIT’s aggregate leverage was 32.6% with three-quarters of its loans on fixed rates.
Management believes that Singapore’s economic growth should boost long-term demand for industrial properties while new infrastructure should underpin demand for Australian industrial properties.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 187 properties spread across eight countries.
The REIT’s assets under management (AUM) stood at S$13.2 billion as of 31 March 2024.
MLT delivered a mixed result for FY2024.
Its gross revenue inched up 0.4% year on year to S$733.9 million but its NPI stayed flat year on year at S$634.9 million because of higher interest expenses and a strong Singapore dollar.
DPU slipped slightly by 0.1% year on year to S$0.09003.
Units of the logistics REIT yielded 6.6% at the last traded price of S$1.36.
MLT continued to report resilient operating metrics with portfolio occupancy at 96% as of 31 March 2024.
The average rental reversion came in at 2.9% for the latest quarter.
The manager is accelerating the REIT’s portfolio rejuvenation with the completion of the divestment of 73 Tuas South Avenue 1 above valuation.
The REIT also completed an acquisition of a warehouse in India for S$14.5 million and has proposed the acquisition of three assets from its sponsor in Malaysia and Vietnam.
ESR-LOGOS REIT (SGX: J91U)
ESR-Logos REIT, or ELR, is an industrial REIT with a portfolio of 72 properties in Singapore (52), Australia (19) and Japan (1).
Its AUM stood at S$5.1 billion as of 31 December 2023.
For 2023, ELR’s gross revenue increased by 12.6% year on year to S$386.4 million.
NPI jumped 11.8% year on year to S$273.2 million.
Despite the improvement, DPU tumbled by 14.5% year on year to S$0.02564 as the number of issued units climbed 27.3% year on year to 7.5 billion.
ELR’s units provide a trailing distribution yield of around 8.7%.
The REIT released its first quarter 2024 (1Q 2024) business update recently.
Gross revenue fell by 8.9% year on year while NPI dipped by 10.8% year on year because of the divestment of 10 properties in 2023.
However, ELR reported a positive rental reversion of 10.8% along with healthy occupancy of 91.7%.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, is an industrial and commercial REIT with a portfolio of 112 properties worth approximately S$6.8 billion.
The logistics and industrial portion of the REIT took up 104 of the 112 properties but made up 71% of its AUM.
For FLCT’s first half of fiscal 2024 (1H FY2024) ending 31 March 2024, revenue inched up 3.9% year on year to S$216 million.
Adjusted NPI edged up 1.8% year on year to S$158.7 million but DPU slipped by 1.1% year on year to S$0.0348 because of higher property operating expenses.
The REIT’s annualised DPU stood at S$0.0696, giving its units a forward distribution yield of 7%.
The portfolio enjoyed healthy positive rental reversions of 14.2% for the latest quarter with occupancy staying stable at 94.3%.
The REIT’s aggregate leverage stood at 32.7%, giving it a debt headroom of S$851 million to conduct yield-accretive acquisitions.
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Disclosure: Royston Yang owns shares of Frasers Logistics & Commercial Trust.
