The REIT sector has taken it on the chin for 2024 as a mixture of high interest rates and weak sentiment buffeted the industry.
Despite the poor sentiment, several REITs managed to perform admirably for this year.
These REIT managers utilised a mixture of capital recycling techniques and organic rental growth to mitigate the macroeconomic headwinds.
As a result, distributions either dipped slightly or managed to even rise.
As the year wraps up, we take stock of five of the best-performing* Singapore REITs that income investors may wish to add to their REIT watchlist for 2025.
*Note: Share prices are as of 29 November 2024.
Manulife US REIT (SGX: BTOU)
Manulife US REIT, or MUST, is a pure-play US office REIT with a portfolio of nine freehold office properties with a total net lettable area of 4.6 million square feet.
MUST’s portfolio was valued at US$1.4 billion as of 31 December 2023.
The office REIT has the honour of logging the best year-to-date (YTD) gain of 25.6% in the Singapore REIT (S-REIT) sector.
Its third quarter of 2024 (3Q 2024) business update showed that MUST is on the path to recovery after the repayment of loans and a divestment during 2024.
The REIT’s recent sale of 400 Capitol at US$233 per square foot helps the REIT to significantly reduce liquidity risk and improve its financial ratios.
Its current portfolio occupancy stood at 77% with a portfolio weighted average lease expiry (WALE) of 5.1 years.
Aggregate leverage stood at 58.2%, largely because of a depreciation in the value of the REIT’s property portfolio and does not constitute a breach of the aggregate leverage limit of 50%.
Under a Master Restructuring Agreement signed with its lenders, MUST is obliged to raise a minimum of US$328.7 million through asset divestments by June 2025.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across 10 countries.
The REIT’s assets under management (AUM) stood at S$3.9 billion as of 30 September 2024.
Keppel DC REIT’s unit price rose 16.2% YTD to reach S$2.22 after putting up an admirable performance for its 3Q 2024 business update.
Gross revenue rose 8.9% year on year to S$76.9 million while net property income (NPI) dipped by 0.2% year on year to S$64.5 million.
The better revenue performance was because of positive rental reversion but this was offset by loss allowances for the REIT’s Guangdong data centres.
Distribution per unit (DPU) inched up 0.4% year on year to S$0.02501.
Keppel DC REIT reported a high portfolio occupancy of 97.6% along with a long WALE of 6.3 years.
Last month, the REIT announced a major transaction – the acquisition of two data centres in Singapore from its sponsor, Keppel Ltd (SGX: BN4).
This purchase will not only be DPU-accretive but also have the potential for further organic rental income growth.
Cromwell European REIT (SGX: CWBU)
Cromwell European REIT, or CEREIT, is a European-focused REIT with a portfolio of 100+ predominantly freehold properties in countries such as Italy, Poland, Germany, France, and Denmark.
The portfolio is valued at €2.2 billion.
CEREIT’s unit price has climbed nearly 15% YTD to €1.62.
For 3Q 2024, the REIT’s gross revenue inched up 0.6% year on year to €53.9 million.
NPI shot up 7% year on year to €34.5 million, but distributable income fell by 7.8% year on year to €20.8 million.
CEREIT’s portfolio enjoyed a high occupancy rate of around 94% as of 30 September 2024.
It also logged a positive rental reversion of 2.3% for the quarter, with a long WALE of 4.7 years.
Aggregate leverage stood at 41% with an all-in interest rate of 3.16%.
Elite UK REIT (SGX: MXNU)
Elite UK REIT is a UK REIT with a portfolio of mostly freehold properties with a total value of £415 million.
Elite’s unit price has improved by 7.1% YTD to close at £0.30.
The UK-based office REIT reported an admirable performance for the first nine months of 2024 (9M 2024).
Revenue came in at £28 million, dipping slightly below £28.5 million in 9M 2023.
Distributable income rose 2.4% year on year to £14 million for 9M 2024.
DPU, at £0.0213, was higher than the £0.0205 paid out in the previous year.
The REIT recently completed refinancing and has no refinancing requirements until 2027.
Gearing stood at 43.6% with borrowing cost at 5%, and Elite UK REIT has hedged 87% of its borrowings to fixed rates through interest rate swap arrangements.
Just last week, the UK REIT entered into a contract to divest Hilden House in Warrington at a 6% premium to its valuation of £3.1 million as of 30 June 2024.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 64 properties worth S$2.25 billion.
These properties comprise three hospitals in Singapore, 60 nursing homes in Japan, and a specialist centre in Malaysia.
PLife REIT managed to eke out a small 3% YTD gain, putting it in fifth place among the S-REITs.
The healthcare REIT reported a mixed performance for 9M 2024.
Both gross revenue and NPI dipped by 2.2% and 2.1%, respectively, to S$108.5 million and S$102.4 million.
The fall was mainly due to currency weakness as the Japanese Yen depreciated against the Singapore Dollar.
DPU for 9M 2024, however, increased by 2.8% year on year to S$0.113.
PLife REIT enjoyed a moderate gearing of 37.5% and a very low all-in cost of debt of 1.36%.
The REIT pulled off a major acquisition in October with the purchase of 11 nursing homes in France for €112 million.
This acquisition will help to further boost its DPU and open up more opportunities for acquisitions in Europe in the future.
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Disclosure: Royston Yang owns shares of Keppel DC REIT.
