The REIT sector is on the mend as interest rates moderate and inflation eases.
While the sector may not be completely out of the woods yet, there is some light at the end of the tunnel after nearly three years of headwinds.
More REITs are now seeing higher net property income and are reporting better distributable income, translating to higher distributions.
Crucially, income investors should also seek REITs backed by strong sponsors that can lower borrowing costs and provide a ready pipeline of assets for acquisition.
Here are three REITs that not only boast good sponsors, but also reported higher distribution per unit (DPU) during their recent earnings.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of three hospitals and medical centres in Singapore, 60 nursing homes in Japan, 11 nursing homes in France, and a medical centre in Malaysia as of 31 March 2025.
PLife REIT has a strong sponsor in IHH Healthcare Berhad (SGX: Q0F), an integrated healthcare provider employing more than 70,000 staff across Singapore, Malaysia, Turkey, India, and China.
The healthcare REIT reported a commendable set of earnings for the first quarter of 2025 (1Q 2025) as its French acquisition began contributing to gross revenue for the first time.
For 1Q 2025, gross revenue rose 7.3% year on year to S$39 million.
Net property income (NPI) improved by 7.5% year on year to S$36.8 million.
DPU inched up 1.3% year on year to S$0.0384.
The REIT has delivered an amazing performance, with its core DPU increasing without fail since its IPO in 2007.
PLife REIT maintained moderate gearing of 36.1% and had a very low cost of debt of just 1.5%.
Earlier this month, the REIT divested its entire Malaysian portfolio for RM 20.09 million, which was a 4.6% premium compared with two independent valuations as of 31 December 2024.
The REIT will book an estimated pre-tax gain of S$0.10 million from this transaction.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 24 data centres across 10 countries.
The REIT’s portfolio value stood at approximately S$4.9 billion as of 31 March 2025.
Keppel DC REIT is helmed by a reputable sponsor in blue-chip asset manager Keppel Ltd (SGX: BN4).
For 1Q 2025, gross revenue jumped 22.6% year on year to S$102.2 million while NPI shot up 24.1% year on year to S$88.1 million.
These increases were attributed to the acquisitions of two data centres in Singapore and a data centre in Tokyo.
The REIT also saw higher contributions arising from contract renewals and rental escalations during the quarter, with an average positive rental reversion of around 7%.
DPU climbed 14.2% year on year to S$0.02503.
Keppel DC REIT enjoyed a high portfolio occupancy of 96.5% and also enjoyed a long weighted average lease expiry (WALE) of 7.1 years by lettable area.
The data centre REIT’s aggregate leverage was low at just 30.2%, along with an average cost of debt of 3.1%.
Generative artificial intelligence (AI) looks set to drive most of the growth in global data centre capacity.
Agentic AI will also boost demand for data centres, which serve AI inference workloads, thus ensuring that data centres will remain an asset class that is very much in demand.
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 retail portfolio spans approximately 2.7 million square feet of net lettable area, and the REIT’s AUM stood at around S$7.1 billion.
FCT has a strong sponsor in Frasers Property Limited (SGX: TQ5), a real estate investor and developer with total assets of around S$39.6 billion as of 30 September 2024.
For the first half of fiscal 2025 (1H FY2025) ending 31 March 2025, FCT saw gross revenue rise 7.1% year on year to S$184.4 million.
NPI increased by 7.3% year on year to S$133.7 million while DPU crept up 0.5% year on year to S$0.06054.
FCT’s committed retail portfolio occupancy was healthy at 99.5% while both shopper traffic and tenant sales enjoyed a 1% and 3.3% year-on-year increase for 1H FY2025.
To top it off, the retail REIT also saw a positive rental reversion of 9% for the half-year, which exceeded the 7.5% logged in the previous corresponding period.
FCT is acquiring Northpoint City South Wing which will be DPU-accretive.
The asset enhancement initiative (AEI) at Hougang Mall has commenced this month and is targeted to complete by 3Q 2026.
The REIT manager is targeting a return on investment of around 7% on capital expenditure of S$51 million.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
