Income investors should feel happy that the REIT sector is getting a reprieve of sorts.
Inflation has eased considerably and interest rates look to be heading lower in the months to come.
The tough times over the past two years have taught investors to focus on quality REITs that boast high portfolio occupancies.
This metric measures the level of demand for the REIT’s properties and a high occupancy can keep a REIT afloat during challenging times.
Here are four Singapore REITs that not only enjoyed high portfolio occupancies but also sported distribution yields of 5.6% and higher.
Sasseur REIT (SGX: CRPU)
Sasseur REIT is a retail outlet mall REIT with four mall assets located in Chongqing, Kunming, and Hefei in China.
These properties have a combined net lettable area of 310,241 square metres.
Sasseur REIT reported a mixed set of earnings for the first half of 2024 (1H 2024).
Its EMA rental income inched up 0.9% year on year to RMB 329 million, with the increase in the fixed component of rental income outweighing the fall in the variable component.
However, EMA rental income fell slightly by 0.4% year on year to S$62.3 million because of currency translation weakness.
Distribution per unit (DPU) for 1H 2024 fell by 5.1% year on year to S$0.03153.
Sasseur REIT’s trailing 12-month DPU stood at S$0.0608, giving its units a trailing distribution yield of 8.7% at a unit price of S$0.70.
The outlet mall REIT released an encouraging business update for the third quarter of 2024 (3Q 2024) and the first nine months of 2024 (9M 2024).
Portfolio occupancy hit a new record of 98% for the quarter but outlet sales fell by 7.2% year on year to RMB 3.1 billion for 9M 2024.
With outlet sales seeing weakness, 9M 2024’s EMA rental income slid by 0.1% year on year to RMB 487.6 million.
Despite this, Sasseur REIT maintained one of the lowest gearing levels among S-REITs at just 25.5% along with a weighted average cost of debt of 5.3%.
Paragon REIT (SGX: SK6U)
Paragon REIT owns a portfolio of five assets in Singapore and Australia as of 30 June 2024.
These include an interest in Paragon, Clementi Mall, and Rail Mall in Singapore, a 50% stake in Westfield Marion Shopping Centre, and an 85% stake in Figtree Grove Shopping Centre, both in Australia.
Like Sasseur, Paragon REIT also reported a mixed set of earnings for 1H 2024.
Gross revenue increased by 3% year on year to S$147.4 million while net property income (NPI) improved by 4.5% year on year to S$110.8 million.
DPU, however, was 4.1% lower year on year at S$0.0232 because management decided to receive its fees in cash to avoid dilution to unitholders.
The REIT’s trailing 12-month DPU stood at S$0.0492, giving its units a trailing distribution yield of 5.7%.
Paragon REIT saw its portfolio rental reversion rate improve to 19.1% for 1H 2024 from just 6.9% a year ago, attesting to the strong demand for its properties.
The REIT reported a high portfolio occupancy rate of 97.9% for 3Q 2024 as gross revenue rose 3% year on year to S$223 million.
Just last week, the REIT announced the divestment of Figtree Grove for A$192 million, a 5% premium to its market valuation.
Daiwa House Logistics Trust (SGX: DHLU)
Daiwa House Logistics Trust, or DHLT, is a Japan-focused REIT with a portfolio of 18 high-quality logistics properties with a gross net lettable area of 476,000 square metres.
The REIT reported a downbeat set of earnings for 1H 2024 as the weak Japanese Yen resulted in translation losses for the logistics REIT.
Gross revenue for 1H 2024 fell by 10.7% year on year to S$27.6 million.
NPI fell by 8.2% year on year to S$21.2 million and DPU dropped 6.1% year on year to S$0.0245.
DHLT’s trailing 12-month DPU stood at S$0.0506, giving its units a trailing 12-month distribution yield of 7%.
The Japanese REIT released a resilient business update for 3Q 2024 with its portfolio occupancy coming in high at 97.5%.
9M 2024 gross rental income improved by 1.8% year on year to JPY 4.2 billion while NPI came in 2.8% higher at JPY 3.6 billion.
Distributable income, however, fell by 5.5% year on year to S$25.5 million, again due to the weakness of the Japanese Yen.
DHLT’s aggregate leverage stood at 39.2% as of 30 September 2024 along with a low weighted average borrowing cost of just 1.13%.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.
The REIT’s total assets under management stood at S$24.5 billion as of 31 December 2023.
CICT reported an upbeat set of earnings for 1H 2024 with gross revenue inching up 2.2% year on year to S$792 million.
NPI increased by 5.4% year on year to S$582.4 million while DPU edged up 2.5% year on year to S$0.0543.
CICT’s trailing 12-month DPU stood at S$0.1088, giving its units a trailing distribution yield of 5.6%.
For 3Q 2024, the retail and commercial REIT continued to report strong operating metrics.
Portfolio occupancy stood at 96.4% with 9M 2024 gross revenue improving by 5.4% year on year to S$872.1 million.
Both the retail and office divisions saw positive rental reversions of 9.2% and 11.7%, respectively, for 9M 2024.
CICT’s gearing stood at 39.4% as of 30 September 2024 along with an average cost of debt of 3.6%.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
