These challenges have resulted in pessimism for the asset class as investors turn cautious.
However, a handful of well-managed REITs are still enjoying healthy rental income.
The fall in unit prices across the REIT sector led to elevated distribution yields.
Income investors can look forward to healthy distribution yields of 5.5% or more from REITs with solid sponsors and good long-term prospects.
Here are five that you should take note of.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 189 properties across eight countries with assets under management (AUM) of S$13.3 billion.
For the first half of fiscal 2024 (1H FY2024), MLT’s gross revenue dipped by 0.7% year on year to S$368.9 million.
Net property income (NPI) fell by 1% year on year to S$320.1 million.
However, the REIT’s distribution per unit (DPU) inched up 0.5% year on year to S$0.04539.
MLT’s trailing 12-month DPU stood at S$0.09034, giving its units a trailing distribution yield of 5.9%.
Portfolio occupancy remained high for the REIT at 96.9% with an average positive rental reversion of 0.2% for the second quarter of FY2024 (2Q FY2024).
MLT’s aggregate leverage came in at 38.9% with a low weighted average annualised cost of debt of 2.5%, allowing the manager to tap further on debt for yield-accretive acquisitions.
CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT, or CLAR, is an industrial REIT with a portfolio of 230 properties worth S$17.2 billion as of 30 September 2023.
Back during the REIT’s first half of 2023 (1H 2023), it saw gross revenue increase by 7.7% year on year to S$718.1 million.
NPI improved by 6.7% year on year to S$508.8 million but DPU slid 2% year on year to S$0.07719.
CLAR’s trailing 12-month DPU stood at S$0.15644, giving its units a trailing distribution yield of 5.8%.
For the industrial REIT’s recent 3Q 2023 business update, occupancy stayed high at 94.5% as of 30 September 2023 with the portfolio enjoying a positive rental reversion of 10.2%.
CLAR’s aggregate leverage remained fair at 37.2% with an average cost of debt of 3.3%.
The industrial REIT had just completed the acquisition of a data centre in the UK for S$209.4 million as well as an asset enhancement initiative (AEI) at The Alpha in Singapore worth S$15.5 million.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across nine countries with an AUM of S$3.7 billion as of 30 September 2023.
For the first nine months of 2023 (9M 2023), Keppel DC REIT reported a 2.6% year-on-year increase in gross revenue to S$211.1 million.
NPI edged up 2.5% year on year to S$191.9 million but DPU slipped by 1.2% year on year to S$0.07543.
The trailing 12-month DPU stood at S$0.10123 with units of the data centre REIT offering a trailing distribution yield of 5.7%.
Keppel DC REIT enjoyed healthy portfolio metrics with an occupancy rate of 98.3% for its latest quarter.
The portfolio’s weighted average lease expiry (WALE) was also long at 7.8 years.
The REIT’s gearing stood at 37.2% with 72% of its debt hedged to fixed rates. The average cost of debt was also reasonable at 3.2% year-to-date.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of 10 retail malls and one office building.
Its AUM is approximately S$6.9 billion as of 30 September 2023.
For its fiscal 2023 (FY2023) ending 30 September, gross revenue increased by 3.6% year on year to S$369.7 million.
NPI inched up 2.7% year on year to S$265.6 million.
Despite the increases in NPI and revenue, DPU fell marginally by 0.6% year on year to S$0.1215.
FCT’s trailing 12-month distribution yield stood at 5.8%.
The retail REIT enjoyed a committed occupancy of 99.7% with a positive rental reversion of 4.7%.
FY2023 also saw higher shopper traffic and tenant sales, with the former jumping 24.7% year on year and the latter rising by 7.3% year on year.
Pro-forma aggregate leverage will fall to 36.1% post-divestment of Changi City Point and the REIT’s cost of debt stood at 3.8%.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 85 properties in Singapore, and one in Japan with an AUM of S$9.2 billion as of 30 September 2023.
For 1H FY2024, MIT’s gross revenue inched up 0.4% year on year to S$344.7 million.
NPI, however, dipped by 0.3% year on year to S$259.4 million with DPU falling by 2% year on year to S$0.0671.
MIT’s trailing 12-month DPU came in at S$0.1343, giving its units a trailing distribution yield of 6.2%.
The REIT had just completed the acquisition of a data centre in Osaka, Japan, for around S$500.1 million.
The portfolio also enjoyed a positive rental reversion of 8.8% for renewal leases.
MIT’s aggregate leverage stood at 37.9% as of 30 September 2023 with a weighted average all-in funding cost of 3.2%.
Close to 80% of its debt is hedged to fixed rates.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Mapletree Industrial Trust.