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4 Singapore REITs and Business Trusts That Increased Their DPU

Mapletree Benoi Logistics Hub
Mapletree Benoi Logistics Hub

It has not been an easy time for the REIT sector.

The combination of high inflation and surging interest rates is putting pressure on the asset class.

REITs rely on borrowings to fund their acquisitions and running costs, thus an increase in borrowing costs will directly impact the distributions that they can pay out.

That said, there have been several REITs, along with business trusts, that bucked the trend.

They belong to a rare bunch that saw their distributions head up in their latest financial release.

Here are four such REITs and business trusts that you can consider for your buy watchlist.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, owns a portfolio of 189 properties in eight countries with total assets under management (AUM) of S$13.3 billion as of 30 September 2023.

For the second quarter of fiscal 2024 (2Q FY2024) ending 30 September 2023, MLT saw gross revenue inch up 1.5% year on year to S$186.7 million.

Net property income (NPI) edged up 1.2% year on year to S$162 million.

Distribution per unit (DPU) went up 0.9% year on year to S$0.02268.

DPU managed to increase despite the REIT’s total issued units increasing by 3.3% year on year.

MLT’s average rental reversion for the quarter was just 0.2% compared to the previous quarter’s 4.2%.

The culprit was the negative rental reversion for its China properties, without which the portfolio’s rental reversion would be a strong and positive 9.1%.

Portfolio occupancy stood high for the industrial REIT at 96.9%.

The REIT’s aggregate leverage stood at 38.9% with a low cost of debt of 2.5%, giving it room to borrow for yield-accretive acquisitions.

The manager of the REIT is continuing with portfolio rejuvenation by selling four assets above their valuations in Malaysia, Singapore, and Japan during 2Q FY2024.

Parkway Life REIT (SGX: C2PU)

Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 61 properties worth S$2.2 billion as of 30 September 2023.

These properties comprise three hospitals in Singapore, 57 nursing homes in Japan, and strata-titled lots in a specialist centre in Kuala Lumpur, Malaysia.

For the first nine months of 2023 (9M 2023), PLife REIT’s gross revenue jumped 24.6% year on year to S$110.9 million.

NPI rose 26.2% year on year to S$104.5 million.

DPU for 9M 2023 rose 2.8% year on year to S$0.1099.

The healthcare REIT had a healthy gearing level of 36% as of 30 September 2023 with debt headroom of around S$639 million before hitting the 50% limit.

It also enjoyed a very low all-in cost of debt of just 1.32%.

Looking ahead, PLife REIT intends to strengthen its presence in its existing markets while building a third key market that can contribute to both asset and DPU growth in the long term.

Keppel Infrastructure Trust (SGX: A7RU)

Keppel Infrastructure Trust, or KIT, is a diversified business trust with a portfolio of strategic infrastructure businesses and assets with an AUM of around S$7.3 billion as of 31 December 2022.

The business trust reported higher distributable income for 9M 2023 of S$210.3 million, up 14.7% year on year.

After adding in capital optimisation from two of its assets, distributable income surged to S$266.1 million, up 93.2% from a year ago.

Because of this capital optimisation, KIT declared a special distribution of S$0.0233 in addition to its DPU of S$0.0097 for the third quarter of 2023.

Together with the DPU from the first half of 2023 of S$0.0193, the total 9M 2023 DPU stood at S$0.0523, an 82.5% jump from 9M 2022’s S$0.0287.

The trust’s gearing stood at 36.8% as of 30 September 2023 and it can tap on an additional S$825 million of loans up to a 45% net gearing level.

KIT has also mitigated interest rate rises by hedging 78.8% of its total loans to fixed interest rates.

NetLink NBN Trust (SGX: CJLU)

NetLink NBN Trust owns, operates, designs, and builds the passive fibre network infrastructure of Singapore’s next-generation broadband (NBN) network.

For the first half of fiscal 2024 (1H FY2024), NetLink saw revenue rise 2.9% year on year to S$205.3 million.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 2.4% year on year to S$149.1 million.

The trust’s DPU inched up 1.1% year on year to S$0.0265.

Net gearing stood at just 21.5% for NetLink, giving it comfortable debt headroom to gear up for acquisitions if need be.

The number of fibre connections continued to rise, with residential connections topping 1.49 million, up from 1.485 million at the end of FY2023.

Non-building address points (NBAP) saw the sharpest rise, going from 2,706 to 2,823 in the same period.

Management is exploring opportunities to invest in telecoms infrastructure overseas that can generate a stable cash flow.

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Disclosure: Royston Yang owns shares of NetLink NBN Trust.

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