It’s no secret that the REIT sector has taken it on the chin for the past two years.
The surge in interest rates led to higher borrowing costs that crimped many REITs’ distributable income, leading to lower distribution per unit (DPU).
The good news is that the sector may be getting a respite.
The US Federal Reserve looks poised to cut interest rates to stimulate the American economy, causing many REITs to surge to their 52-week highs.
Here are five Singapore REITs that recently touched their year-high and you can assess if they should end up on your buy watchlist.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across 10 countries.
The REIT’s assets under management (AUM) stood at S$3.9 billion as of 30 June 2024.
Keppel DC REIT’s unit price has risen by close to 12% year-to-date and recently hit its 52-week high of S$2.20.
The data centre REIT reported a mixed performance for the first half of 2024 (1H 2024).
Revenue jumped 11.9% year on year to S$157.2 million while net property income (NPI) inched up 4.2% year on year to S$132.6 million.
The REIT’s results were negatively impacted by a loss allowance on its Chinese data centre tenant, Bluesea.
Coupled with a 14.1% year-on-year jump in finance costs, DPU fell by almost 10% year on year to S$0.04549.
Despite the dip, Keppel DC REIT’s portfolio occupancy stood high at 97.5%.
The REIT also enjoyed overall positive rental reversions across its portfolio, and has a diversified tenant base with the majority of its rental income from clients with investment grade or equivalent credit profiles.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine retail malls and an office building.
The REIT’s AUM stood at approximately S$7.1 billion as of 31 March 2024.
FCT’s unit price hit its 52-week high of S$2.42 recently, and is up 6.7% year-to-date.
The retail REIT posted an admirable performance for the first half of fiscal 2024 (1H FY2024) ending 31 March 2024.
Revenue and NPI fell by 7.2% and 8.4% year on year, respectively, to S$172.2 million and S$124.6 million.
The declines were because of the divestment of Changi City Point in October 2023 along with disruptions from asset enhancement initiative (AEI) works at Tampines 1 Mall.
However, the fall in DPU was gentler at just 1.8% year on year to S$0.06022.
FCT reported healthy operating metrics during its 3Q FY2024 business update.
Retail committed occupancy stood high at 99.7% while shopper traffic and tenant sales saw a year-on-year rise of 4.1% and 0.7%, respectively, for the quarter.
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.
As of 30 June 2024, MIT’s AUM stood at S$9 billion.
MIT’s unit price touched its 52-week high of S$2.53 recently and the share price is flat year-to-date after recovering from its 52-week low of S$2.09.
The industrial REIT reported a solid set of earnings for its first quarter of fiscal 2025 (1Q FY2025) ending 30 June 2024.
Gross revenue rose 2.7% year on year to S$175.3 million with NPI edging up 1.3% year on year to S$132.5 million.
DPU improved by 1.2% year on year to S$0.0343.
MIT’s portfolio occupancy improved from 91.4% in the previous quarter to 91.9% currently.
The portfolio also enjoyed a positive rental reversion of 9.2% for renewal leases.
MIT completed the Phase 3 of fit-out works for its new Osaka data centre with Phase 4 to be completed by May 2025.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.
The REIT’s AUM stood at S$24.5 billion as of 31 December 2023.
CICT’s unit price hit its 52-week high of S$2.18 recently and is up 2.5% year-to-date.
For 1H 2024, CICT’s gross revenue rose 2.2% year on year to S$792 million and NPI improved by 5.4% year on year to S$582.4 million.
DPU increased from S$0.053 a year ago to S$0.0543.
The REIT’s committed portfolio occupancy stood high at 96.8% and its retail and office divisions saw positive rental reversions of 9.3% and 15%, respectively, for 1H 2024.
CICT is working on two AEIs concurrently.
The first at IMM Building in Singapore is progressing smoothly and is on track to meet the target return on investment (ROI) of around 8%.
The second is for the Gallileo Building in Frankfurt and the REIT has achieved a committed occupancy of 96.7% thus far.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 63 properties with an AUM of around S$2.2 billion as of 30 June 2024.
PLife REIT’s unit price recently hit its 52-week high of S$3.95 and is up 6% year-to-date.
The healthcare REIT pulled off a commendable financial performance for 1H 2024.
Both gross revenue and NPI dipped by 2.7% and 2.5% year on year, respectively, to S$72.4 million and S$68.4 million.
The fall was mainly due to the depreciation of the Japanese Yen against the Singapore Dollar.
DPU, however, managed to climb by 3.5% year on year to S$0.0754.
PLife REIT maintained a moderate gearing of 35.3% and has a very low cost of debt at just 1.35%.
In early August, the healthcare REIT completed the yield-accretive acquisition of a nursing home in Japan for around S$20.7 million, lifting its Japan portfolio to 60 properties.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Mapletree Industrial Trust.
