The REIT sector may have been battered last year, but there is a silver lining for investors.
REITs that are helmed by strong sponsors give investors confidence that they can tide through these challenges.
A reputable sponsor is in a good position to assist a REIT should it face financial trouble.
A REIT can also borrow at more attractive interest rates if it is backed by a robust sponsor.
Finally, a sponsor can help the REIT to grow by providing a ready pipeline of assets for the REIT to acquire.
Here are four Singapore REITs with strong sponsors that you can consider for your buy watchlist.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across nine countries.
Its assets under management (AUM) stood at S$3.7 billion as of 30 September 2023.
Keppel DC REIT has a reputable sponsor in blue-chip asset management Keppel Limited (SGX: BN4).
The REIT has grown by leaps and bounds over the years, with its AUM going from just eight assets worth S$1 billion at its IPO in 2014 to 23 assets worth S$3.7 billion in nine years.
The data centre REIT’s performance has remained resilient despite high interest rates and inflation.
For the first nine months of 2023 (9M 2023), gross revenue inched up 2.6% year on year to S$211.1 million.
Net property income (NPI) edged up 2.5% year on year to S$191.9 million.
Distribution per unit (DPU) slipped 1.2% year on year to S$0.07543.
Keppel DC REIT has maintained a high occupancy of 98.3% and enjoys a long weighted average lease expiry (WALE) of 7.8 years.
The sponsor has more than S$2 billion of data centre assets for acquisition by Keppel DC REIT through its portfolio along with its private data centre funds.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with 21 properties in Singapore, three in Sydney, and two in Frankfurt.
Its AUM stood at S$24.2 billion as of 30 September 2023.
CICT’s sponsor is CapitaLand Investment Limited (SGX: 9CI), a real estate manager with S$133 billion in real estate AUM and S$89 billion in funds under management as of 31 March 2023.
For 9M 2023, the REIT reported a 9.8% year on year increase in gross revenue to S$1.2 billion with NPI rising by 6.8% year on year to S$827.3 million.
Operating metrics were healthy with portfolio committed occupancy hovering at 97.3% and a portfolio WALE of 3.5 years.
Rental reversion for both the retail and commercial segments was positive at 7.8% and 8.8%, respectively.
There was good news on the retail front as tenant sales per square foot inched up 4% year on year while shopper footfall jumped by close to 13% year on year.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is an industrial REIT with a portfolio of 189 properties across eight countries with an AUM of S$13.3 billion as of 30 September 2023.
MLT has a strong sponsor in Mapletree Investments Pte Ltd, a real estate development and investment company that owns and manages S$77.4 billion of office, retail, logistics, data centre, residential, and industrial properties as of 31 March 2023.
For the first half of fiscal 2024 (1H FY2024) ending 30 September 2023, the logistics REIT reported a mixed performance.
Gross revenue slid 0.7% year on year to S$368.9 million while NPI fell 1% year on year to S$320.1 million.
DPU, however, inched up 0.5% year on year to S$0.04539.
MLT’s portfolio occupancy remained high at 96.9% with a positive rental reversion of 0.2%.
The REIT conducted five divestments that were either completed or pending completion in the second quarter of FY2024, with all sales above valuation.
MLT had also concluded the acquisition of eight properties in Tokyo, Seoul and Sydney for S$904.4 million, helping to boost both its asset base and DPU.
Frasers Hospitality Trust (SGX: ACV)
Frasers Hospitality Trust, or FHT, is a hotel and serviced residence trust with a portfolio of 14 assets in nine cities within Asia, Australia, and Europe.
FHT’s AUM stood at S$1.9 billion as of 30 September 2023.
The hospitality trust has a strong sponsor in Frasers Property Limited (SGX: TQ5), a property developer and investor with total assets worth S$40.2 billion across five property sub-types.
For its fiscal 2023 (FY2023) ending 30 September 2023, FHT saw gross revenue jump 28.5% year on year to S$123.2 million as border reopenings led to a strong influx of tourists.
NPI climbed 30.1% year on year to S$90.5 million.
Distribution per stapled security (DPSS) surged 49.3% year on year to S$0.024426.
FHT’s portfolio valuation also crept up 1.7% year on year to S$1.93 billion.
The trust’s gearing stood at just 34% with an average cost of borrowing of 3.1%, opening it up to further acquisitions to boost its asset base and DPSS.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
