It’s been a torrid time for the REIT sector but some REITs are holding up better than others.
High inflation has raised operating expenses for a raft of businesses, and REITs are not immune to this headwind.
Meanwhile, interest rates have also surged as the US Federal Reserve delivered its sharpest-ever benchmark rate hikes.
Income-driven investors will naturally be curious to know how REITs intend to deal with these challenges.
The upcoming REIT earnings season could shed some light on how the larger REITs tackle these issues.
At the same time, REITs with a 31 December fiscal year-end will also be declaring a distribution to unitholders.
Here are four Singapore REITs that will announce their earnings later this month and what you can watch for.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, has a portfolio of 85 properties in Singapore and 56 in the US with total assets under management (AUM) of S$8.9 billion as of 30 September 2022.
The industrial REIT is slated to release its fiscal 2023’s third quarter (3Q2023) results after the market closes on 26 January.
For 2Q2023, MIT reported a 12.8% year on year increase in gross revenue to S$175.5 million while net property income (NPI) increased 8.3% year on year to S$130.3 million.
Distribution per unit (DPU), however, dipped by 3.2% year on year to S$0.0336.
To mitigate the rise in expenses and borrowing costs, MIT will release S$6.6 million of tax-exempt income over three quarters from 3Q2022.
This move will go some way in buffering the decline in DPU.
Investors will also be watching MIT’s cost of debt closely as this metric had jumped from 2.5% as of 30 June to 2.9% as of 30 September.
With a trailing 12-month DPU of S$0.1383, MIT’s units had a trailing distribution yield of 6.1%.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with 23 data centres in its portfolio spread out over nine countries.
The REIT’s AUM stood at S$3.6 billion as of 30 September 2022.
Keppel DC REIT continued to post higher year on year DPU for the first nine months of 2022 (9M2022), even though gross revenue only inched up 0.7% year on year.
Helped by a sharp year on year jump in finance income, the data centre REIT saw its DPU inch up 3.4% year on year to S$0.07634 for 9M2022.
Keppel DC REIT will be releasing its full fiscal 2022 (FY2022) earnings after the market closes on 31 January.
Investors will be scrutinising the REIT’s operating expenses to assess if inflation will affect its distributable income for the fourth quarter (4Q2022).
Keppel DC REIT had previously communicated that it has fixed its electricity tariffs for its Singapore colocation assets while more than 90% of electricity cost increases are passed through to the rest of its colocation tenants.
The REIT also completed the acquisition of a Guangdong data centre in August last year, and investors should see full rental revenue recognition captured in 4Q2022.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 61 properties with an AUM of S$2.35 billion as of 30 September 2022.
PLife REIT will be releasing its FY2022 earnings after the market closes on 27 January.
For its 3Q2022 business update, the healthcare REIT announced that gross revenue had dipped by 1.3% year on year to S$89 million for 9M2022.
NPI, however, managed to creep up 0.1% year on year to S$82.8 million.
PLife REIT has a track record of raising its core DPU without fail every year since FY2008, and investors will be eager to find out if the REIT can continue its unbroken record.
With Japan’s core inflation hovering at a 41-year high of 3.7% in November, investors will also be curious to know if the Japanese nursing home leases will see rental rates adjust upwards in line with the “Up Only” rental review provision.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, is a hospitality trust with an AUM of around S$2.9 billion as of 30 September 2022.
CDLHT will release its FY2022 earnings before trading begins on 30 January.
The hospitality trust is enjoying a breath of fresh air as the tourism industry recovers with the reopening of borders and resumption of air travel.
Back in 9M2022, NPI surged by 43.7% year on year to S$82.6 million.
What’s more, for 3Q2022, revenue per available room (RevPAR) for 12 out of 18 hotels exceeded that of 3Q2019.
Investors may also receive an update on the asset enhancement progress for Grand Copthorne Waterfront Hotel, where refurbishment for 529 rooms commenced in October last year.
This year, there are plans to renovate the meeting facilities and once completed, the hotel could help to boost CDLHT’s rental income just as Chinese tourists are flocking back to Singapore.
Singapore Tourism Board expects international visitor arrivals to hit 12 million to 14 million this year, with full tourism recovery expected by 2024.
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Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust and Keppel DC REIT.