The REIT sector enjoyed a breath of fresh air last week when the US Federal Reserve announced a jumbo-sized 0.5 percentage point interest rate cut.
This was the first interest rate reduction since 2020, and it was implemented because officials felt confident that inflation is heading lower towards its target of 2%.
Many REITs saw their unit prices shoot up in anticipation of this announcement as investors felt optimistic that lower rates will help to ease pressure on finance costs.
As this financial pressure eases, REITs will also be better placed to report higher distributions.
Here are five REITs that recently hit their 52-week highs.
OUE REIT (SGX: TS0U)
OUE REIT is a commercial and hospitality REIT with six properties in Singapore and one in Shanghai with 1,655 upscale hotel rooms and around 2.2 million square feet of prime office and retail space.
OUE REIT’s unit price hit its 52-week high of S$0.34 last week and its shares are up 16% year-to-date.
The REIT reported a mixed set of earnings for the first half of 2024 (1H 2024).
Revenue rose 5.7% year on year to S$146.7 million with net property income (NPI) inching up 1.6% year on year to S$117.1 million.
Distribution per unit (DPU), however, slid by 11.4% year on year to S$0.0093 because of an 18.5% year-on-year jump in finance costs.
Despite the dip, OUE REIT’s Singapore office portfolio enjoyed a high committed occupancy of 95.2% as of 30 June 2024.
In addition, the office portfolio also saw a positive rental reversion of 11.7%.
Over at its hospitality segment, revenue per available room (RevPAR) increased by 15.8% year on year to S$269 as the tourism sector continued its recovery.
OUE REIT’s retail arm at Mandarin Galley saw high committed occupancy of 98.3% with a strong positive rental reversion of 28.4%.
Suntec REIT (SGX: T82U)
Suntec REIT holds a variety of commercial and retail properties in Singapore including Suntec City, Suntec Singapore Convention & Exhibition Centre, a one-third interest in One Raffles Quay, and a one-third interest in Marina Bay Financial Centre.
The REIT also owns stakes in commercial buildings in Australia and the UK.
Suntec REIT recently saw its unit price touch a 52-week high of S$1.38 and is up 8.1% year-to-date.
The REIT also reported a mixed set of earnings for 1H 2024 with revenue edging up 1.2% year on year to S$226.9 million.
NPI, however, dipped by 1.5% year on year to S$151 million.
DPU fell by 12.5% year on year to S$0.03042.
Suntec REIT’s aggregate leverage ratio stood at 42.3% with an all-in financing cost of 4.02%.
Suntec REIT’s Singapore office portfolio’s committed occupancy stood at 99.3% with a strong rental reversion of 9.7% for 1H 2024.
Its Australian portfolio saw committed occupancy at 89.1% with a positive rental reversion of 13.4%.
For the UK, the portfolio committed occupancy came in at 95.5%.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with 23 data centres in 10 countries with assets under management (AUM) of S$3.9 billion as of 30 June 2024.
The REIT’s unit price hit its 52-week high of S$2.28 recently and at S$2.18 presently, shares are up 13% year-to-date.
Keppel DC REIT also reported a mixed performance as the REIT was impacted by tenant in arrears and high finance costs.
For 1H 2024, gross revenue rose 12% year on year to S$157.2 million with NPI improving by 4.2% year on year to S$132.6 million.
DPU declined by nearly 10% year on year to S$0.04549.
Keppel DC REIT boasted a high portfolio occupancy rate of 97.5% along with a long weighted average lease expiry (WALE) of 6.4 years by net lettable area (NLA).
The REIT manager just renewed a major contract in Singapore with >40% positive rental reversion.
The data centre REIT recently made its maiden foray into Japan with the acquisition of a Tokyo data centre for close to S$198 million.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, is an industrial REIT with a portfolio of 28 properties, of which 25 are in Singapore and three in Australia.
AAREIT’s unit price scaled its 52-week high of S$1.37 recently and its shares are up 0.8% year-to-date.
Like the REITs above, AAREIT also reported a mixed set of earnings for the first quarter of fiscal 2025 (1Q FY2025) ending 30 June 2024.
Gross revenue rose 9.7% year on year to S$47.3 million with NPI improving by 6.6% year on year to S$34.4 million.
DPU slid just slightly, down 1.7% year on year to S$0.0227.
The industrial REIT continued to enjoy high portfolio occupancy of 97.3% and also reported a positive rental reversion of 12.8% for 1Q FY2025.
In addition, AAREIT enjoyed a high tenant retention rate of 91.3%.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 63 properties in Singapore, Japan, and Malaysia with an AUM of approximately S$2.2 billion.
The healthcare REIT’s unit price hit its 52-week high of S$4.17 recently and its shares are up 10.3% year-to-date.
For 1H 2024, gross revenue and NPI dipped by 2.7% and 2.5%, respectively, to S$72.4 million and S$68.4 million.
DPU, however, rose 3.5% year on year to S$0.0754.
PLife REIT continued to enjoy a very low cost of debt of just 1.35% along with an aggregate leverage ratio of 35.3%.
In late July, the healthcare REIT announced the acquisition of a newly-built nursing home property in Osaka which is yield-accretive and will deepen the REIT’s working relationship with its Japanese business partner.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Suntec REIT.
