It’s no secret that the REIT sector has fared poorly this year.
Despite the pessimism, many REITs are still reporting healthy financial and operating numbers.
Investors need to look for REITs with high-quality assets and strong tenants that can withstand a possible recession.
The outlook may be uncertain now, but once the storm clears, these REITs are poised to enjoy a much-needed share price rebound.
Here are five Singapore REITs that are well-positioned for better days.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns 101 commercial and logistics properties spread out across five countries – Germany, Singapore, the UK, Australia, and the Netherlands.
The REIT’s assets under management (AUM) stood at S$6.7 billion as of 31 March 2022.
FLCT’s unit price has tumbled around 13% year to date to hit S$1.33.
Yet, the REIT has reported a high occupancy rate of 96.1% and also saw its distribution per unit (DPU) for its fiscal 2022’s first half (1H2022) inch up 1.3% year on year to S$0.0385.
Forward distribution yield stands at 5.8% for its units.
FLCT’s aggregate leverage is also low at 29.5% post the repayment of borrowings in April, leaving it with S$3 billion of debt headroom to pursue DPU-accretive acquisitions.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT owns a portfolio of 21 data centres across nine countries worth S$3.5 billion as of 31 March 2022.
The REIT’s unit price has slipped by 21% year to date to close at S$1.95, close to its 52-week low of S$1.87.
Keppel DC REIT has, however, reported a decent set of earnings for its fiscal 2022’s first quarter (1Q2022).
Gross revenue dipped by 0.9% year on year while net property income (NPI) fell by 1.4% year on year to S$60.1 million.
However, DPU edged up by 0.2% year on year to S$0.02466.
Annualised DPU of S$0.9864 means that units of the REIT are trading at a prospective distribution yield of 5.1%.
Keppel DC REIT continues to tap on acquisitions to grow both its asset base and DPU, having completed the purchase of a second data centre in London recently for S$104 million.
In addition, the REIT also recently acquired two data centres in Guangdong, China, that will lift DPU by 2.7%.
Elite Commercial REIT (SGX: MXNU)
Elite Commercial REIT is a UK-focused REIT that owns 155 office properties worth £500.1 million as of 31 December 2021.
Close to 100% of the properties are leased to the UK Government on a triple-net basis (i.e. all repairs and maintenance are borne by the tenant).
Units of the REIT have tumbled 10.4% year to date to £0.60.
Elite reported a strong set of financial numbers for 1Q2022, with distributable income jumping 36.2% year on year to £6.1 million.
DPU rose 4.9% year on year to £0.0128.
Annualised DPU stands at £0.0512, giving its units a forward distribution yield of 8.5%.
The break lease option was removed from 109 properties recently, providing income stability to 85.2% of the REIT’s gross rental income until March 2028.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, is a US-based REIT that owns 20 grocery-anchored shopping centres and four self-storage properties.
The REIT’s portfolio value stood at US$688.5 million with committed occupancy of 96.4% as of 31 March 2022.
UHREIT’s units have remained relatively resilient, falling by just 7.5% year to date to US$0.62.
The REIT’s 1Q2022 saw gross revenue rising by 20% year on year to US$16.2 million while NPI increased by 13.1% year on year to S$11.4 million.
Distributable income rose 7.9% year on year to US$8.1 million.
The REIT’s gearing of 38.9% and low cost of debt of 2.89% should stand it in good stead to acquire more assets in due course.
UHREIT recently acquired Upland Square Shopping Centre for US$85.7 million which promises to increase both its portfolio value and DPU.
CapitaLand China Trust (SGX: AU8U)
CapitaLand China Trust, or CLCT, is a retail and industrial REIT that owns a total of 20 properties in China located in 12 cities valued at RMB 24.8 billion as of 31 December 2021.
Of these, 11 are retail properties, five are business parks and the remainder comprises logistics parks.
CLCT’s unit price has held steady, declining by just 5% year to date.
The REIT’s 1Q2022 saw gross revenue rising 24% year on year to RMB 489.9 million while NPI climbed 30.4% year on year to RMB 344.5 million.
CLCT has a five-year acquisition roadmap to reduce its reliance on retail assets to just 30% of AUM by 2026.
Its sponsor, CapitaLand Investment Limited (SGX: 9CI), also has a robust pipeline with 12 retail assets, 29 commercial and integrated developments, and eight new economy assets that can potentially be injected into the REIT.
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Disclaimer: Royston Yang owns shares of Frasers Logistics & Commercial Trust and Keppel DC REIT.