The REIT sector may have taken a beating in the past two years, but there may be a glimmer of hope on the horizon.
Interest rates may be heading down soon, although the timing for this is still uncertain.
The sharp surge in interest rates in the past two years led to higher finance costs across the board, resulting in REITs reporting lower distributions.
With the current earnings season in full swing and an expectation that the sector will see better days ahead, here are four Singapore REITs that should be on your radar.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and one in Japan.
The REIT’s assets under management stood at S$9 billion as of 30 June 2024.
MIT reported an encouraging set of earnings for the first quarter of fiscal 2025 (1Q FY2025).
Gross revenue inched up 2.7% year on year to S$175.3 million, buoyed by revenue contributions from the newly-acquired Osaka data centre along with new leases and renewals across the portfolio.
Net property income (NPI) edged up 1.3% year on year to S$132.5 million.
Distribution per unit (DPU) increased by 1.2% year on year to S$0.0343.
The REIT’s trailing 12-month DPU stood at S$0.1347, giving its units a trailing distribution yield of 5.9%.
Investors should also note that MIT has a strong sponsor in Mapletree Investments Pte Ltd, a real estate owner and operator with an AUM of S$77.5 billion as of 31 March 2024.
The REIT maintained a high portfolio occupancy of 91.9% as of 30 June 2024 along with a portfolio weighted average lease expiry (WALE) of 4.6 years by gross rental income (GRI).
In addition, MIT also enjoyed an average positive rental reversion rate of 9.2% for renewal leases.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 63 properties across Singapore, Malaysia, and Japan.
The REIT’s AUM stood at around S$2.23 billion as of 30 June 2024.
For the first half of 2024 (1H 2024), PLife REIT saw revenue dip by 2.7% year on year to S$72.4 million.
NPI fell by 2.5% year on year to S$68.4 million.
The decline was mainly due to the depreciation of the Japanese Yen against the Singapore dollar.
However, this was offset by properties with step-up lease arrangements and partial contributions from two nursing homes acquired in October last year.
Consequently, DPU rose 3.5% year on year to S$0.0754, giving the healthcare REIT an annualised DPU of S$0.1508.
PLife REIT’s units provide a trailing 12-month distribution yield of 4.2%.
The REIT maintained a moderate gearing level of 35.3% with a very low cost of debt of just 1.35%.
The manager is seeking to unlock value from non-core assets in existing markets and reinvest the proceeds in good, strategic assets.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, is a hospitality trust with 102 properties in 45 cities across 16 countries.
CLAS’ AUM as of 30 June 2024 stood at S$8.5 billion.
Southeast Asia’s largest hospitality trust reported a mixed set of earnings for 1H 2024.
Revenue increased by 11% year on year to S$386.4 million with gross profit improving by 12% year on year to S$172.9 million.
The better performance came from stronger lodging demand coupled with a stronger operating performance.
Distribution per stapled security (DPSS), however, dipped by 8% year on year to S$0.0255.
When adjusted for one-off items, DPSS only slipped slightly by 1% year on year to S$0.0241.
CLAS’s trailing 12-month DPSS came in S$0.0634, giving its units a trailing distribution yield of 7%.
The trust saw its revenue per available unit (RevPAU) increase by 4% year on year to S$155 for the second quarter of 2024 (2Q 2024).
CLAS also has a well-staggered master lease expiry schedule with just 8% of GRI expiring in 2024.
The trust has a pipeline of asset enhancement initiatives (AEIs) from 2024 to 2026 that will provide it with its next leg of growth beyond the travel recovery.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, has a portfolio of 12 properties with 3,015 hotel rooms and serviced residence units valued at approximately S$2.5 billion as of 31 December 2023.
FEHT reported a higher DPSS for 1H 2024 on the back of a 3.4% year-on-year increase in gross revenue to S$53.8 million.
Its NPI inched up 1% year on year to S$49.5 million and its DPSS edged up 2.1% year on year to S$0.0196.
The trailing 12-month distribution yield for the hospitality trust came in at 6.6%.
Aggregate leverage remained low at just 30.8% for FEHT with an average cost of debt of 4.1%.
Its Hotels segment saw average occupancy rise to 80.4% for 1H 2024, 2.1 percentage points higher than a year ago.
Revenue per available room (RevPAR) increased by 6.4% year on year to S$141.
The Serviced Residences segment saw a mixed performance – average occupancy eased to 85.1% in 1H 2024 from 88.3% in 1H 2023 but RevPAR crept up 1% year on year to S$226.
On AEIs, the trust completed the renovation of the fifth floor of Rendezvous Hotel and the façade painting for Village Residence Robertson Quay.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.
