The REIT sector had a tough two years but it seems there may be some light at the end of the tunnel.
Inflation has begun to ease, with the latest Singapore core inflation reading coming in at just 1.8% for December 2024.
Interest rates are also on the decline, with the US Federal Reserve slashing the federal funds rate by a full percentage point last year.
The central bank has pencilled in another two rate cuts this year.
More REITs are now reporting better financial numbers and we showcase four that recently raised their distributions.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 25 data centres spread across 10 countries.
The REIT’s assets under management (AUM) stood at close to S$5 billion as of 31 December 2024.
Keppel DC REIT reported a commendable financial performance for the second half of 2024 (2H 2024).
Gross revenue rose 8.8% year on year to S$153.1 million because of strong positive rental reversions and contributions from the newly-acquired Tokyo data centre last year.
Net property income (NPI) increased by 8.5% year on year to S$127.6 million while distribution per unit (DPU) climbed 13.2% year on year to S$0.04902.
The REIT enjoyed higher finance income from its Australian data centre note that helped to push DPU higher while finance costs stabilised at S$25.6 million for both periods.
For the full year (2024), revenue was up 10.3% year on year while DPU inched up 0.7% year on year to S$0.09451.
The data centre REIT boasted a high portfolio occupancy rate of 97.2% as of 31 December 2024 and also enjoyed a strong portfolio reversion of around 39% for the year.
The Asia-Pacific region saw a record high data centre demand driven by widespread digitalisation and adoption of artificial intelligence (AI) and cloud computing.
Management expects future demand to accelerate, underpinned by the continued expansion of hyperscale-based cloud computing and generative AI needs.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 properties in Singapore, and two properties in Japan.
MIT’s AUM stood at around S$9.2 billion as of 31 December 2024.
The industrial REIT reported an admirable financial performance for its third quarter of fiscal 2025 (3Q FY2025) ending 31 December 2024.
Gross revenue rose 2% year on year to S$177.3 million while NPI edged up 2.6% year on year to S$133.2 million.
DPU went up 1.5% year on year to S$0.0341.
The better performance came about because of contributions from the new Tokyo freehold property acquisition along with the completion of the second and third phases of the fit-out works at the Osaka data centre.
The portfolio also enjoyed a weight average positive rental reversion of 9.8% for renewal leases for 3Q FY2025.
MIT’s portfolio occupancy stood high at 92.1% and its gearing, at 39.8%, will also allow headroom for further yield-accretive acquisitions.
StarHill Global REIT (SGX: P40U)
StarHill Global REIT, or SGREIT, has a portfolio of nine properties in Singapore, Malaysia, Australia, Japan, and China, valued at around S$2.8 billion.
The REIT reported a respectable financial performance for the first half of fiscal 2025 (1H FY2025) ending 31 December 2024.
Gross revenue rose 1.7% year on year to S$96.3 million, with higher contributions from the Singapore and Perth properties along with the appreciation of the Malaysian Ringgit against the Singapore dollar.
NPI improved by 1.6% year on year to S$75.6 million while DPU crept up 1.1% year on year to S$0.018.
SGREIT’s portfolio enjoyed a high occupancy rate of 97.7% and a long weighted average lease expiry of 7.4 years by net lettable area.
The manager has commenced asset enhancement works at Wisma Atria Mall which will commence in the 4Q FY2025 (i.e. from March 2025).
Costing S$800,000, these enhancements will create additional tenancy shopfront with added safety features and improve accessibility for the disabled.
Part of the car park will also be repurposed for office use, freeing up 3,250 square feet of space for lease.
This project will cost S$4 million and have an estimated return on investment of 8%.
OUE REIT (SGX: TS0U)
OUE REIT’s portfolio consists of six office, hospitality and retail assets located in Singapore.
Its total AUM stood at S$5.8 billion as of 31 December 2024.
For 2H 2024, OUE REIT saw revenue rise 1.7% year on year to S$148.8 million, contributed by the stable operating performance of its Singapore office portfolio along with the successful asset enhancement of Crowne Plaza Changi Airport.
However, NPI dipped by 2.3% year on year to S$116.9 million with finance costs rising nearly 6% year on year to S$51.8 million.
2H 2024 did not have a S$5 million retention sum that was present in 2H 2023.
Hence, DPU climbed 8.7% year on year to S$0.0113.
The REIT’s aggregate leverage stood at 39.9% as of 31 December 2024, with the weighted average cost of debt at 4.7%.
Of the total debt of S$2.37 billion, only S$116 million is due for refinancing in 2025.
OUE REIT’s Singapore office portfolio enjoyed a high committed occupancy of 94.6% and saw a positive rental reversion of 10.7% for 2024.
Mandarin Gallery posted a strong performance too.
Committed occupancy came in at 98.2% with a positive rental reversion of 17.3%.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Mapletree Industrial Trust.
