The REIT sector has been hit by the twin headwinds of high inflation and surging interest rates.
Because of this pessimism, share prices of a wide swath of REITs have been battered with most of them having fallen year-to-date (YTD).
However, there is a small crop of resilient REITs that have managed to eke out a YTD share price gain.
Coupled with the regular distributions that they pay, investors will be happy to know that they have enjoyed a respectable total return for the year.
We have rounded up five REITs that posted a YTD gain that may continue into 2024.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres in nine countries with assets under management (AUM) of S$3.7 billion as of 30 September 2023.
The data centre REIT saw its unit price increase by 8.9% last year to close at S$1.95, making it one of the best-performing REITs.
For the first nine months of this year (9M 2023), gross revenue inched up 2.6% year on year to S$211.1 million while net property income (NPI) edged up 2.5% year on year to S$191.9 million.
Distribution per unit (DPU), however, dipped by 1.2% year on year to S$0.07543.
Keppel DC REIT maintained a high occupancy of 98.3% as of 30 September 2023 with a long portfolio weighted average lease expiry (WALE) of 7.8 years.
The REIT’s aggregate leverage stood at 37.2% with an average cost of debt of 3.5% for its latest quarter (3Q 2023), giving it sufficient debt headroom for more acquisitions using debt financing.
The outlook for the REIT is bright as data centre demand remains strong with global colocation data centre demand estimated to grow at 19.2% annually from 2023 to 2027 driven by generative artificial intelligence (AI) and digitalisation trends.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, owns a portfolio of 14 assets in nine cities within Asia, Australia, and Europe with a total AUM of around S$1.93 billion as of 30 September 2023.
The hospitality trust’s unit price increased by 5.6% in 2023 to close at S$0.665.
With the surge in air travel and tourism, FHT reported a sparkling set of earnings for FY2023 as gross revenue jumped 28.5% year on year to S$123.2 million.
NPI surged by 30.1% year on year to S$90.5 million while distribution per stapled security soared 49.3% year on year to S$0.024426.
FHT’s gearing stood at 34% with an effective cost of borrowing of 3.1%.
The hospitality trust has three-quarters of its loans on fixed rates, thereby mitigating a sharp rise in finance costs for 2024.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building in Singapore.
FCT’s unit price increased by 9.2% last year to close at S$2.07.
The retail REIT reported a commendable set of earnings for its fiscal 2023 (FY2023) ending 30 September 2023.
Gross revenue rose 3.6% year on year to S$369.7 million with NPI increasing 2.7% year on year to S$265.6 million.
DPU slipped just slightly by 0.6% year on year to S$0.1215.
FCT reported a very high committed occupancy of 99.7% and enjoyed a committed positive rental reversion of 4.7%.
Shopper traffic and tenant sales stayed strong with a 24.7% and 7.3% year on year increase, respectively.
The REIT’s Tampines 1 asset enhancement initiative (AEI) is proceeding well with the first batch of AEI units slated to open this month.
CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT, or CLAR, is Singapore’s oldest industrial REIT and owns a portfolio of 230 properties in Singapore, Australia, the UK, Europe, and the US.
Its AUM stood at S$17.2 billion as of 30 September 2023.
CLAR’s unit price managed a 10.6% gain last year to close at S$3.03.
The REIT reported strong operating metrics for its 3Q 2023 business update.
Portfolio occupancy stood high at 94.5% with a positive rental reversion of 10.2%.
CLAR recently completed the acquisition of a data centre in the UK, bringing total YTD acquisitions to S$724.3 million.
The industrial REIT is also undertaking an AEI at The Alpha in Singapore for S$15.5 million.
Meanwhile, CLAR has another four ongoing projects worth S$600 million (three in Singapore, one in the US) with estimated completion dates ranging from the current quarter to the first quarter of 2026.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 189 properties spread across eight countries.
Its AUM stood at S$13.3 billion as of 30 September 2023.
MLT’s unit price produced a 10.1% gain in 2023 to close at S$1.74.
The REIT delivered a mixed performance for the first half of fiscal 2024 (1H FY2024) ending 30 September 2023.
Gross revenue and NPI slid slightly to S$368.9 million and S$320.1 million, respectively.
However, DPU crept up slightly from S$0.04516 last year to S$0.04539 for 1H FY2024.
The manager of MLT continues to be active in capital recycling.
For the second quarter of FY2024, five divestments were completed or pending completion in Singapore, Malaysia, and Japan.
All the properties sold were at a premium to their valuations.
The logistics REIT also completed an acquisition in June 2023 of eight properties worth S$904.4 million in Japan, South Korea, and Australia.
Just this month, MLT conducted an acquisition of a modern Grade A warehouse in India for around S$14.5 million which is accretive to its DPU.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
