The outlook remains uncertain for the REIT sector, as interest rates may remain higher for longer.
Also, the announcement of a comprehensive set of tariffs imposed by US President Donald Trump has thrown yet another spanner in the works.
However, REITs are not sitting ducks as they can employ a variety of methods to grow their distributions and mitigate these headwinds.
One of these methods is to acquire properties to boost their portfolio’s asset base and grow their distribution per unit (DPU).
Here are four REITs that recently conducted acquisitions to help boost their DPU.
CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust, or CLINT, is the first Indian property trust in Asia.
Its portfolio consists of 10 IT business parks, three industrial facilities, one logistics park, and four data centre developments.
Back in February, CLINT entered into a forward purchase agreement to acquire an office project at Nagawara in Bangalore, India.
The project is an office one with high-end retail, has a freehold tenure with a total development potential of 1.36 million square feet (sf).
CLINT will provide funding of up to S$156.4 million over the next four years, with the total purchase price expected to be around S$233.6 million.
The location is close to an upcoming metro station and well-connected to the international airport.
Prominent tenants in the micro-market include Qualcomm (NASDAQ: QCOM), Accenture (NYSE: ACN), and Oracle (NYSE: ORCL).
Management expects the acquisition to bring in net profit of approximately S$7.7 million while the REIT’s DPU is expected to rise from S$0.0684 to S$0.0696.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, is a hospitality REIT with a portfolio of 12 properties totalling 3,015 hotel rooms and serviced residence units.
The portfolio’s assets under management (AUM) stood at S$2.52 billion as of 31 December 2024.
Back in February, FEHT made its maiden foray into Japan with the acquisition of Four Points by Sheraton in Nagoya.
The property, an upscale 319-room hotel, was purchased for around S$52.8 million, an attractive 23% discount to its independent valuation.
The hotel operator will be Marriott International (NASDAQ: MAR).
This Japanese expansion seeks to capitalise on the growing tourism market in the country, while also tapping into exhibition, conference, and events traffic.
The hotel offers convenient access to the airport, train station, and ferry and is a well-designed, high-quality freehold property.
This acquisition is projected to increase 2024’s distribution per stapled security (DPSS) of S$0.0404 by 1.7% to S$0.0411.
The purchase will be funded by JPY-denominated debt facilities, which will serve as a natural hedge against currency fluctuations.
The trust’s gearing is expected to remain low at around 32.9% post-acquisition.
Digital Core REIT (SGX: DCRU)
Digital Core REIT, or DCR, is a data centre REIT with a portfolio of 10 data centres worth US$1,6 billion as of 31 December 2024.
Last month, DCR completed the acquisition of a 20% stake in a fully-fitted freehold data centre in Osaka, Japan, its second in the country, for around US$87 million.
This facility offers 19,900 kW of IT load and is situated on DCR’s sponsor’s data centre campus, which services a diverse community of leading hyperscale and technology companies.
This purchase will improve geographic diversification and expand the data centre REIT’s presence in Japan, increasing the annualised contribution from Osaka from the present 7% to 11% post-acquisition.
With this acquisition, DCR’s 2024 DPU of US$0.036 is expected to increase by 1.8% to US$0.0367.
The acquisition will be funded by JPY-denominated borrowings using a revolving credit facility, which will be refinanced with a long-term, fixed-rate JPY debt with a cost of borrowing of just 2%.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building in Singapore.
FCT’s AUM stood at around S$7.1 billion as of 31 December 2024.
Last month, FCT announced the acquisition of Northpoint City’s South Wing (NPCSW) for S$1.17 billion, consolidating the REIT’s position as a leading owner of prime suburban retail space.
The asset has a net lettable area (NLA) of 301,579 sf and is the largest prime suburban mall in the northern region of Singapore.
NPCSW has a 100% occupancy and has steadily grown its net property income from fiscal 2020 (FY2020) to FY2024 at a compound annual growth rate (CAGR) of 8%.
With FCT now owning the entire NPC mall, it can unlock value through a comprehensive asset enhancement initiative.
The manager expects to generate up to 8,000 sf of potential additional retail NLA while achieving higher rental yields through the re-mixing of tenancies.
This acquisition is expected to be DPU-accretive, with FY2024’s DPU of S$0.12042 increasing by 2% to S$0.1228.
Pro-forma aggregate leverage is expected to increase just slightly from 38.5% to 39.8%.
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Disclosure: Royston Yang owns shares of Digital Core REIT.
