It is a known fact that the REIT sector had a tough year in 2023.
The combination of high inflation and surging interest rates hit the asset class hard as investors fret over lower distributions.
Despite the challenges, it is business as usual for some REIT managers as they undertake acquisitions and divestments.
These activities should help the REIT to mitigate some of the headwinds until interest rates eventually head down.
Here are four REITs and business trusts that could be interesting for you to consider for your buy watchlist.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 189 properties across eight countries with assets under management (AUM) of S$13.3 billion as of 30 September 2023.
MLT announced the acquisition of a modern Grade A warehouse in Farukhnagar in Delhi, India, for around S$14.5 million.
The property is a single-storey logistics facility with 38 years of lease remaining and is fully leased to one of India’s largest third-party logistics (3PL) players.
This acquisition will help to deepen MLT’s presence in India, where GDP growth has rebounded post-pandemic underpinned by a large, rising middle-class population.
This asset is also located in an established warehousing hub with excellent connectivity and was newly completed in 2022.
The remaining lease for the 3PL tenant is approximately eight years and the purchase will be accretive to distribution per unit (DPU).
MLT will use debt financing for this acquisition which should be completed by the fourth quarter of fiscal 2024.
Upon completion, the logistics REIT’s aggregate leverage will be around 38.9%.
CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust, or CLINT, is an Indian property trust with a portfolio of nine IT business parks, one logistics park, one industrial facility, and four data centres in India.
The REIT’s total AUM stood at S$2.7 billion as of 30 September 2023.
The industrial REIT recently announced the completion of the acquisition of Casa Grande Phase 2.
The acquisition comprises two fully leased industrial facilities, one to a leading electronics manufacturer and the other to a global energy solutions provider.
Consideration for the acquisition amounted to around S$28.7 million and is the second forward purchase transaction that CLINT entered into with the Casa Grande Group.
With this purchase, CLINT’s completed floor area for its industrial and logistics assets has increased to form nearly 10% of its portfolio.
The industrial REIT’s completed portfolio floor area will increase to 19.6 million square feet.
Post-acquisition, CLINT’s portfolio in Chennai, India, will comprise two business parks, three industrial facilities and a data centre under development which should be completed by 2025.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, is the largest hospitality trust in Asia with an AUM of S$8.1 billion as of 30 September 2023.
Its portfolio comprises 103 properties with more than 18,000 units in 44 cities across 15 countries.
CLAS announced the divestment of three hotels in Osaka, Japan, to an unrelated third party for a total of around S$99.8 million.
These three properties will be divested at a premium of 15% above their combined book value and the sale will be completed by the first quarter of 2024 (1Q 2024).
Net proceeds are estimated at around S$36.4 million and CLAS will recognise a net gain of about S$10.1 million.
CEO Serena Teo believes that this divestment can help unlock the value of the properties and aid in redeploying capital to better-yielding assets.
Post-divestment, CLAS will have a portfolio of 30 properties in Japan comprising serviced residences, hotels, rental housing, and student accommodation assets.
Teo reiterated that Japan remains an attractive market for CLAS with its tourism sector receiving a strong boost from both international and domestic tourists.
Keppel Infrastructure Trust (SGX: AR7U)
Keppel Infrastructure Trust, or KIT, is a diversified business trust with around S$7.3 billion in assets for 2022.
The trust will acquire a 45% stake in Enpal B.V.’s solar portfolio through a special purpose vehicle for a total consideration of €109 million.
Enpal is Germany’s first green technology unicorn and is one of the largest residential solar installers in Europe.
The acquired portfolio consists of over 60,000 bundled photovoltaic systems across Germany with a projected combined generation capacity of 585 MW.
The first close of 53,500 systems will be completed by the end of 2023 while the remaining 65,00 systems will be acquired in three phases by the end of June 2024.
This acquisition will boost 2022’s DPU by 2% to S$0.0389 while gearing will increase by 1.7 percentage points from 39.8% to 41.5%.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
