The REIT sector has remained remarkably resilient even in the face of high inflation and surging interest rates.
Thanks to SGX’s efforts, Singapore’s REIT sector has matured considerably in the past two decades and the country is now a veritable REIT hub.
When it comes to REITs, bigger is usually better as these REITs can have the clout and scale for larger acquisitions.
Size also confers an advantage as these REITs can be included on major REIT indices, thereby boosting their visibility and liquidity.
Ultimately, income-seeking investors are concerned with a REIT’s distribution per unit (DPU) as these dividends represent a stream of passive income.
We highlight five billion-dollar REITs that we believe can continue to grow their DPU.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail cum commercial REIT that owns 21 properties in Singapore, two in Germany, and three in Australia.
CICT’s portfolio was worth S$24.2 billion as of 31 December 2022.
The REIT has a market capitalisation of S$13.4 billion and reported an increase in its DPU from S$0.104 in 2021 to S$0.1058 in 2022.
CICT’s retail portfolio also enjoyed a 25% year on year jump in footfall with a 22.5% year on year increase in tenant sales.
Rent reversion was also positive for both its retail and office components, coming in at 1.2% and 7.6%, respectively.
In addition, the manager is also rejuvenating some of the portfolio’s assets for better rental income.
Raffles City Singapore just saw the completion of the reconfiguration of its former anchor tenant’s space.
CQ @ Clarke Quay is also undergoing an asset enhancement initiative (AEI) that is on track to complete by the third quarter of this year.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is an industrial REIT with a portfolio of 186 properties across eight countries.
Total assets under management stood at S$12.6 billion as of 31 December 2022.
The S$8.7 billion REIT reported a respectable set of earnings for the first nine months of fiscal 2023 (9M FY2023).
Gross revenue rose 11.3% year on year to S$551.7 million while DPU inched up 3.4% year on year to S$0.06743.
The occupancy rate remained high at 96.9% with a positive rental reversion of 2.9% for the quarter.
The manager just announced a major acquisition late last month of eight properties across Japan, Australia and South Korea that should raise its 9M FY2023 DPU by 2.2%.
In the longer term, MLT also has redevelopment projects at Benoi Road in Singapore and Malaysia that are slated to be completed by 2025 and 2027, respectively.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across nine countries with assets under management (AUM) of S$3.7 billion.
For 2022, the S$3.6 billion REIT reported a 3.7% year on year increase in DPU to S$0.10214.
The REIT can mitigate the impact of inflation through positive rental reversions and built-in income escalations on its existing leases.
With an aggregate leverage of 36.4%, the manager will also pursue data centre acquisitions to grow its DPU further.
The sponsor also has a pipeline of more than S$2 billion of data centre assets for potential injection into Keppel DC REIT.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 61 properties valued at around S$2.2 billion as of 31 December 2022.
The REIT owns three hospitals in Singapore, 57 nursing homes in Japan, and strata-titled lots/units in a specialist clinic in Malaysia.
The S$2.4 billion REIT has demonstrated an amazing track record of DPU growth over the years.
Its core DPU has enjoyed an unbroken increase from S$0.0683 in 2008 to S$0.1438 in 2022.
There are indications that this track record can continue.
PLife REIT acquired five nursing homes back in September 2022 that should contribute positively to its rental revenue for 2023.
At the same time, major refurbishment works are being carried out at Mount Elizabeth Hospital in Singapore to retrofit and rejuvenate the asset.
This renovation is in line with the new leases signed that should see DPU continue to climb.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT that owns 10 suburban malls and one office property as of 31 December 2022.
For its fiscal 2022 (FY2022) ending 30 September 2022, FCT’s DPU inched up by 1.2% year on year from S$0.12085 to S$0.12227.
FCT had undertaken acquisitions and AEI that should help to boost its rental income in the coming year.
The retail REIT acquired a 50% stake in NEX mall back in January this year and also purchased an additional 10% stake in Waterway Point last September.
At the same time, FCT is also undertaking AEI at Tampines 1 to add 8,000 square feet of net lettable area with an 8% return on investment.
Not sure which REIT to put your money in? Use our 7-step REIT checklist to find one that fits into your retirement plan. Checklist is inside our latest FREE report “Singapore REITs Retirement Plan”. Click here to download it now.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
