The REIT sector should see some relief in sight as interest rates start their decline.
Inflation is also gradually easing as these higher rates start to kick in.
Income investors may be interested to scour the REIT universe to find suitable investments that can pay out higher distributions.
One area that could be interesting is REITs that own purely overseas properties.
These REITs offer exposure to a specific property type or region that may suit your portfolio.
Here are four Singapore REITs with overseas properties that you can consider for your buy watchlist.
Daiwa House Logistics Trust (SGX: DHLU)
Daiwa House Logistics Trust, or DHLT, is a logistics REIT that owns a portfolio of 18 logistics properties across Japan with a total net lettable area (NLA) of more than 476,000 square metres.
DHLT reported a mixed set of earnings for the first nine months of 2024 (9M 2024).
Gross rental income inched up 1.8% year on year to JPY 4.2 billion while net property income (NPI) rose 2.8% year on year to JPY 3.6 billion.
Distributable income, however, dipped by 5.5% year on year to S$25.5 million.
The results were impacted mainly by the weakness of the Japanese Yen against the Singapore dollar.
During the third quarter of 2024 (3Q 2024), the REIT concluded the acquisition of D Project Tan Duc 2 in Vietnam, its first property outside of Japan.
This property is leased to a single tenant for 20 years from October 2023, thereby providing income stability.
DHLT sported a high portfolio occupancy of 97.5% with a long weighted average lease expiry (WALE) of 6.6 years based on gross rental income (GRI).
The REIT’s aggregate leverage stood at 39.2% and it enjoyed a very low cost of borrowing at just 1.13%.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, owns a portfolio of 20 grocery and necessity-based properties along with two self-storage properties in the US.
The carrying value of these properties stood at around US$738.7 million with a total NLA of around 3.6 million square feet.
Like DHLT, UHREIT also reported a mixed set of earnings for 9M 2024.
Gross revenue edged up 0.6% year on year to US$54.7 million but NPI fell by 3.4% year on year to US$37.4 million.
This performance was attributed to rental escalations from existing leases and contributions from new leases, but offset by the absence of rental revenue from divested properties.
Higher interest costs caused distributable income to tumble by 15.1% year on year to US$18.7 million.
Portfolio occupancy improved from 96.3% in the previous quarter to 97.6% for 3Q 2024 for the grocery and necessity-based properties.
The portfolio enjoys a long WALE of 7.9 years and saw strong leasing momentum with 11 new and renewal leases executed during the quarter.
Tenant retention rate stayed high at 92%.
The US retail market stayed resilient in 3Q 2024 with retail sales up 2.3% year on year.
Combined with a favourable outlook for grocery-anchored strip centres, these two data points bode well for UHREIT’s prospects.
Acrophyte Hospitality Trust (SGX: XZL)
Acrophyte Hospitality Trust, or AHT, is a hospitality trust with a portfolio of 33 select-service hotels across the US.
These hotels have a total of 4,315 rooms and are spread across 17 states.
AHT reported a slightly downbeat set of earnings for 9M 2024.
Revenue dipped by 3.9% year on year to US$129.4 million.
Gross operating profit (GOP) fell by 4.9% year on year to US$46.3 million with GOP margin narrowing from 36.2% to 35.8%.
NPI slipped 4% year on year to US$33.8 million.
AHT saw the portfolio end with 34 hotels as of 30 September 2024 as three hotels were divested in the past year.
The number of rooms also fell by 8% year on year to 4,442.
The occupancy rate stood at 69.1% as of 30 September 2024, down 1.5 percentage points year on year.
The good news is that average daily rate eked out a small 1% year on year increase to US$140.
US hotel occupancy is projected to grow with gradual business improvement and lower inflation.
The strong US dollar is stimulating outbound tourism, though, and is causing a slowdown in domestic leisure demand.
Cromwell European REIT (SGX: CWBU)
Cromwell European REIT, or CEREIT, owns a €2.2 billion portfolio comprising more than 100 predominantly freehold properties across multiple countries in Europe.
The REIT’s portfolio has an aggregate lettable area of around 1.7 million square metres with more than 800 tenant-customers.
CEREIT reported a resilient set of financials that was also negatively impacted by higher finance costs.
Gross revenue stood at €160.2 million, down 1.1% year on year, while NPI slid by 0.8% year on year to €100 million.
Distributable income fell by nearly 9% year on year to €60.4 million because of divestments and higher interest costs.
Portfolio occupancy stood high at around 94% with a WALE of 4.7 years.
3Q 2024 saw a positive rental reversion of 2.3% for the portfolio and a total of 43,608 square metres of leases were either signed or renewed.
Aggregate leverage stood at 41% and CEREIT had an interest coverage ratio of 3.6 times.
The manager’s key priorities are to maintain high portfolio occupancy and drive positive rent reversion while progressing on €200 million of key development properties in the Netherlands, Paris, and Rome.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
