The REIT sector has gone through tough times in the past two years because of a surge in interest rates and elevated inflation.
However, there may be some light at the end of the tunnel as the US Federal Reserve starts to slash rates, with a full one percentage point reduction last year.
Notwithstanding this move, REITs continue to act as stable sources of dividend income as they are required to pay out at least 90% of their earnings to enjoy tax benefits.
Income investors are on the lookout for strong, well-managed REITs that can continue to pay dividends over the long term.
Here are four Singapore REITs that can pay you dividends for the rest of your life.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 64 properties with assets under management (AUM) of around S$2.25 billion as of 30 September 2024.
The portfolio comprises three hospitals in Singapore, 60 nursing homes in Japan, and strata-titled units/lots in a specialist clinic in Malaysia.
PLife REIT has a strong sponsor in IHH Healthcare Berhad (SGX: Q0F), a healthcare group that owns 80 hospitals in 10 countries.
For the first nine months of 2024 (9M 2024), gross revenue dipped by 2.2% year on year to S$108.5 million.
Net property income (NPI) slid 2.1% year on year to S$102.4 million.
However, distribution per unit (DPU) inched up 2.8% year on year to S$0.113.
After the third quarter of 2024 (3Q 2024), PLife REIT made its maiden acquisition of 11 nursing homes in France for €112 million.
This acquisition is yield-accretive and helps to expand the healthcare REIT’s mandate for its next phase of growth in Europe.
The REIT sports a gearing of 37.5% and a low all-in cost of debt of just 1.36%, allowing the REIT to gear up further in the future for more acquisitions.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across 10 countries.
The REIT’s AUM stood at S$3.9 billion as of 30 September 2024.
Keppel DC REIT boasts a strong sponsor in blue-chip asset manager Keppel Ltd (SGX: BN4) which has a pipeline of more than S$2 billion worth of potential data assets for the REIT to acquire.
The REIT posted a mixed set of earnings for 3Q 2024 with gross revenue rising 8.9% year on year to S$76.9 million.
The increase was because of higher gross revenue from strong positive rental reversions along with contributions from acquisitions.
NPI, however, dipped by 0.2% year on year to S$64.4 million mainly due to a loss provision for rental income from the REIT’s Guangdong data centres.
DPU managed to eke out a small 0.4% year-on-year increase to S$0.02501.
Last November, Keppel DC REIT acquired two data centres in Singapore from its sponsor.
These data centres boast full occupancy and the transaction is also yield-accretive.
Gearing is expected to fall to 33.3% post-acquisition and at the conclusion of a fundraising exercise, providing a higher debt headroom for the REIT to conduct more acquisitions.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine retail malls and an office building.
The REIT’s AUM stood at around S$7.1 billion as of 30 September 2024 (FY2024).
Heartland malls such as Hougang Mall, Tiong Bahru Plaza, and Waterway Point should see continued high patronage from heartlanders even during tough times, thus ensuring that FCT’s portfolio remains resilient.
The REIT also has a strong sponsor in property giant Frasers Property Limited (SGX: TQ5).
For FY2024, FCT saw gross revenue and NPI fall 4.9% and 4.6% to S$351.7 million and S$253.4 million, respectively.
The decline was because of the absence of contribution from Changi City Point, which was sold in October 2023, and lower contributions from Tampines 1 Mall because of its asset enhancement initiative (AEI).
Stripping these out, revenue and NPI would have risen 3.5% and 3.4%, respectively.
DPU dipped by just 0.9% year on year to S$0.12042.
Retail occupancy stayed high at 99.7% and the REIT also saw positive rental reversions of 7.7% for FY2024, demonstrating high demand for shop space in its malls.
Aggregate leverage stood at 38.5% as of FY2024 with an average cost of debt of 4.1%, opening up possibilities for the REIT to make more acquisitions in FY2025.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, is a hospitality trust and the largest lodging trust in Asia Pacific.
The trust has total assets of S$8.5 billion and its portfolio comprises 101 properties located in 45 cities within 16 countries.
CLAS has a strong sponsor in blue-chip property giant CapitaLand Investment Limited (SGX: 9CI).
For the first half of 2024 (1H 2024), CLAS saw revenue rise 11% year on year to S$386.4 million.
Gross profit increased by 12% year on year to S$172.9 million, but distribution per stapled security (DPSS) fell by 8% year on year to S$0.0255.
The fall in DPSS was attributable to higher finance costs due to overall higher interest rates which pushed up the trust’s cost of debt.
For its 3Q 2024 business update, gross profit rose 8% year on year while revenue per available unit inched up 3% year on year to S$158.
CLAS will focus on divestments to unlock value while working on AEIs to drive higher returns for unitholders.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
