The REIT sector has seen improving fundamentals are interest rates and inflation ease.
This should be good news to income investors who rely on this asset class for a consistent source of passive income.
Although several REITs are still facing the prospects of higher finance costs, investors should look past this and focus on other metrics such as portfolio occupancy and rental reversion.
A high portfolio occupancy implies that the REIT’s properties are seeing good leasing demand while positive rental reversions indicate that tenants are willing to pay up to lease space in the REIT’s properties.
Here are four Singapore REITs that reported both high portfolio occupancy (i.e. above 90%) and also boasted double-digit positive rental reversion.
Keppel REIT (SGX: K71U)
Keppel REIT owns a portfolio of 13 prime commercial assets located in South Korea (1), Australia (7), Japan (1), and Singapore (4).
The portfolio was valued at around S$9 billion as of 31 December 2024.
Keppel REIT reported a mixed set of earnings for 2024.
Property income rose 12.2% year on year to S$261.6 million while net property income (NPI) increased by 10.7% year on year to S$201.9 million.
However, borrowing costs shot up 32.2% year on year to S$88.5 million, resulting in distribution per unit (DPU) dipping by 3.4% year on year to S$0.056.
Despite the lower DPU, Keppel REIT maintained a high portfolio committed occupancy of 97.9% as at the end of 2024.
The REIT also reported a robust positive rental reversion of 13.2% for its portfolio.
Keppel REIT’s gearing stood at 41.2% with an all-in interest rate of 3.4%.
Around 23% of its loans will come due this year and the manager is in discussions with lenders for refinancing.
The REIT also boasts a diversified tenant base of 489 tenants, many of which are established, blue-chip companies.
Keppel REIT is also conducting an asset enhancement initiative (AEI) on One Raffles Quay, introducing new food and beverage outlets such as Vino Tinto and unveiling a refreshed garden plaza.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, is an industrial REIT with a portfolio of 28 properties located in Singapore (25) and Australia (3).
The portfolio’s assets under management (AUM) stood at S$2.1 billion as of 31 December 2024.
AAREIT reported a respectable set of earnings for its first nine months of fiscal 2025 (9M FY2025) ending 31 December 2024.
Gross revenue improved by 5.7% year on year to S$139.1 million while NPI inched up 1.9% year on year.
DPU eked out a minor 1.1% year-on-year increase to S$0.0707.
The industrial REIT reported a portfolio occupancy of 94.5% and saw positive rental reversion of 21.2% for 9M FY2025.
The REIT had a low aggregate leverage of 33.7% with a blended cost of debt of 4.4%.
The manager is targeting value creation through two AEIs, one at 7 Clementi Loop and the other at 15 Tai Seng Drive.
These AEIs, which cost up to S$32 million, should be completed by 1Q FY2026.
OUE REIT (SGX: TS0U)
OUE REIT’s portfolio consists of six office, hospitality, and retail assets with an AUM of S$5.8 billion as of 31 December 2024.
The REIT reported a mixed set of earnings for 2024 as finance costs ate into distributable income.
Revenue rose 3.7% year on year to S$295.5 million but NPI slipped 0.4% year on year to S$234 million.
Finance costs climbed nearly 14% year on year to S$106.5 million, which led to DPU dipping by 1.4% year on year to S$0.0206.
OUE REIT reported a high committed occupancy of 94.6% for its Singapore office portfolio along with a 10.7% positive rental reversion.
Its retail segment, Mandarin Gallery, announced an even higher portfolio occupancy of 98.2%.
The mall’s positive rental reversion stood at 19.8% for 2024.
OUE REIT’s aggregate leverage stood at 39.9% with an average cost of debt of 4.7%.
Slightly more than three-quarters of its loans are pegged to fixed rates.
Its hospitality division reported robust numbers too, with revenue per available room (RevPAR) growing by 9.2% year on year to S$273 for 2024.
ESR-REIT (SGX: J91U)
ESR-REIT is an industrial REIT that owns a portfolio of 72 properties in Singapore (52), Australia (18), and Japan (2).
Its AUM stood at approximately S$6 billion as of 31 December 2024.
The REIT reported a downbeat set of earnings for 2024 with both gross revenue and NPI dipping by 4.1% and 4.2% year on year to S$370.5 million and S$261.7 million, respectively.
The result was expected due to non-core divestments and other divestments plus the decommissioning of 2 Fishery Port for potential redevelopment.
DPU fell by 17.4% year on year to S$0.02119.
The portfolio registered a positive rental reversion of 10.3% for 2024 and the occupancy rate ended the year at 92.3%.
Management expects to receive a full year contribution from acquisitions in 2025 while completed AEIs will also provide a rental income boost.
The REIT continued to see strong demand from New Economy sectors and expects to continue registering positive rental reversions this year.
Elsewhere, the manager expects finance costs to decline as the all-in cost of debt has been lowered to 3.84% from 4.03% just six months ago.
The refinancing of existing hedges at lower rates, along with interest savings from refinancing the expiring 2025 debt, should also contribute to overall lower finance costs for this year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.