The REIT sector has encountered big headwinds in the past two years with surging interest rates and rising inflation.
Despite these troubles, REITs remain a great choice for dependable dividends.
Income investors who are unsure which REITs to accumulate should look for attributes such as a high-quality, diversified portfolio as well as a strong sponsor.
These characteristics enable these REITs to remain resilient in the face of economic challenges.
Here are four Singapore REITs with solid attributes that you can consider for your buy watchlist.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is one of the largest healthcare REITs in Asia with a portfolio of 63 properties worth around S$2.2 billion as of 31 December 2023.
The REIT is backed by a strong sponsor in IHH Healthcare Berhad (SGX: Q0F), a healthcare conglomerate with more than 80 hospitals in 10 countries.
PLife REIT boasts an unbroken track record of rising core distribution per unit (DPU) since its IPO, with its core DPU rising from S$0.0683 in 2008 to S$0.1477 in 2023.
Based on existing lease agreements, 98.5% of the healthcare REIT’s gross revenue has downside protection.
The REIT sports a healthy gearing level of 36.4% as of 31 March 2024 with a low cost of debt of just 1.3%.
91% of the REIT’s loans are pegged to fixed rates, which helps to keep borrowing costs from shooting higher.
For the first quarter of 2024 (1Q 2024), PLife REIT continued its impressive streak of DPU increases.
Although gross revenue and net property income (NPI) dipped by 2.7% and 2.8% year on year, respectively, DPU eked out a 4% year-on-year increase to S$0.0379.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 140 properties comprising 56 in the US, 83 in Singapore, and one in Japan.
The REIT’s assets under management (AUM) stood at S$8.9 billion as of 31 March 2024.
MIT has a reputable sponsor in Mapletree Investments Pte Ltd, a global real estate firm that owns and manages S$77.4 billion of properties as of 31 March 2023.
The REIT reported a resilient set of results for its fiscal 2024 (FY2024) ending 31 March 2024.
Gross revenue inched up 1.8% year on year to S$697.3 million while NPI edged up 0.6% year on year to S$521 million.
DPU slipped slightly by 1% year on year to S$0.1343.
Despite the DPU dip, MIT reported positive rental reversions across all its property segments, with the weighted average positive rental reversion coming in at 6.6% for renewal leases.
The industrial REIT also boasts a diversified list of more than 2,000 tenants with the largest taking up just 6% of gross rental income (GRI).
MIT had a healthy gearing ratio of 38.7% for FY2024 along with an average cost of debt of 3.1%.
Close to 85% of the REIT’s debt is on fixed rates.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 26 properties across Singapore (21), Frankfurt (2) and Sydney (3).
The REIT’s AUM stood at S$24.5 billion as of 31 December 2023.
CICT’s sponsor is CapitaLand Investment Limited (SGX: 9CI), a real estate investment manager with a real estate AUM of S$133 billion and funds under management of S$90 billion as of 30 September 2023.
The REIT pulled off an admirable performance for 2023 as it registered increases in revenue, NPI and DPU.
Gross revenue rose 8.2% year on year to S$1.6 billion in 2023 with NPI improving by 7% year on year to S$1.1 billion.
DPU crept up 1.6% year on year to S$0.1075.
For its 1Q 2024 business update, CICT continued to report strong financial and operating metrics.
Portfolio committed occupancy stood high at 97% while both the retail and commercial divisions logged positive rental reversions of 7.2% and 14.1%, respectively.
Meanwhile, gross revenue for 1Q 2024 also rose 2.6% year on year to S$398.6 million.
NPI did even better, increasing by 6.3% year on year to S$293.7 million.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban malls and an office building.
The REIT is one of the largest retail mall owners in Singapore and has an AUM of around S$7.1 billion as of 30 September 2023.
FCT is anchored by a strong sponsor in Frasers Property Limited (SGX: TQ5), an investor, developer and manager of real estate products and services with an AUM of approximately S$40.1 billion as of 31 March 2024.
The retail REIT posted a respectable financial performance for the first half of fiscal 2024 (1H FY2024) ending 31 March 2024.
Gross revenue fell by 7.2% year on year while NPI declined by 8.4% year on year.
The tumble was caused by lower contributions as Changi City Point was sold off in October last year and with ongoing renovation works at Tampines 1 Mall.
Excluding these effects, both gross revenue and NPI would have increased by 2.9% and 2.1% year on year, respectively.
Despite the decrease in NPI, DPU fell by just 1.8% year on year to S$0.06022 as FCT’s malls continued to enjoy healthy footfall and tenant sales.
For the latest quarter, the REIT saw shopper traffic increase by 8.1% year on year while tenant sales increased by 4.3% year on year.
FCT’s committed occupancy also remained very high at 99.9%.
As a testament to the high demand for FCT’s portfolio of malls, 1H FY2024’s rental reversion came in at a positive 7.5%, an increase from the prior year’s positive 4.3%.
In our latest report, we dive into five standout Singapore REITs offering distribution yields exceeding 5.5%. Why settle for less? Get more dividends hitting your bank account with our REITs guide. Click here to download for free now.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.
