Yahoo Finance 4 Singapore REITs Trading Near Their 52-Week Lows: Can They Recover?
The REIT sector has been pummelled by higher interest rates and inflation.
These two headwinds are making investors worried as they fret that distributions could be reduced.
As a result, several REITs have been plumbing their 52-week lows as pessimism takes hold of the asset class.
But amid the bad news, there could be value emerging for these beaten-down REITs as bargain hunters scour the landscape for great buys.
We look at four Singapore REITs that recently touched their year-lows to see if they can recover in the months ahead.
Sabana REIT (SGX: M1GU)
Sabana REIT is an industrial REIT with a portfolio of 18 properties in Singapore covering high-tech industrial, warehouse and logistics, and general industrial sectors.
The total assets under management (AUM) for the REIT was around S$1 billion as of 31 December 2023.
The REIT’s unit price has tumbled by 12.2% year to date to hit its 52-week low of S$0.36.
Sabana REIT reported a mixed set of results for 2023.
Gross revenue rose 17.9% year on year to S$111.9 million because of three consecutive years of double-digit positive rental reversion.
Net property income (NPI) inched up 3.2% year on year to S$55 million.
However, distribution per unit (DPU) tumbled 9.5% year on year to S$0.0276 because of higher utility costs and finance expenses, as well as the retention of 10% of distributable income to fund the internalisation of the REIT manager.
For 2023, portfolio occupancy remained high at 91.2% with rental reversion once again registering a strong positive 16.6% after increasing by 12.9% a year ago.
Sabana REIT also achieved good progress on its 1 Tuas Avenue 4 asset enhancement initiative (AEI) and is on track to receive its Temporary Occupation Permit (TOP) by the first half of 2024 (1H 2024).
Keppel Pacific Oak US REIT (SGX: CMOU)
Keppel Pacific Oak US REIT, or KORE, is an office REIT with 13 freehold office buildings and business campuses across eight markets in the US.
The REIT has an AUM of US$1.3 billion as of 31 December 2023.
KORE has seen its share price plunge by 65.5% year to date and touched its 52-week low of US$0.12 recently.
The US commercial REIT announced its decision to suspend its distributions because of a difficult US commercial sector.
At the same time, the REIT also announced a recapitalisation plan to tackle the rise in its leverage ratio to 43.2%.
KORE also reported a mixed set of earnings for 2023 with gross revenue and NPI rising by 1.9% and 2.2% year-on-year, respectively, to US$150.8 million and US$86.1 million.
Distributable income, however, fell by 13.8% year on year to US$52.2 million.
The REIT’s portfolio valuation also fell by 6.8% year on year to US$1.3 billion as of 31 December 2023.
Distributions will be suspended for two years to conserve cash but if market conditions allow, these distributions could re-commence at an earlier date than planned.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, has a diversified portfolio of 108 properties across Singapore, the UK, Australia, the Netherlands, and Germany.
The REIT’s AUM stood at S$6.7 billion as of 31 December 2023.
FLCT’s unit price has fallen by 6.1% year to date, with the units hitting their 52-week low of S$1 recently.
The industrial and commercial REIT released an encouraging business update for the first quarter of fiscal 2024 (1Q FY2024) ending 31 December 2023.
Stable portfolio occupancy of 95.8% was reported with a positive rental reversion of 18.2%.
FLCT also sported a negligible leverage ratio of just 30.7% with slightly more than three-quarters of its loans pegged to fixed rates.
The low gearing provides a significant debt headroom of S$1.1 billion (to reach 40% gearing) for the REIT to conduct yield-accretive acquisitions.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is an industrial REIT with a portfolio of 187 properties spread across eight countries.
The REIT’s AUM stood at S$13.3 billion as of 31 December 2023.
Shares of MLT have declined 11.7% year to date with the units hitting their 52-week low of S$1.44 recently.
The logistics REIT reported an admirable set of earnings for the third quarter of fiscal 2024 (3Q FY2024).
Gross revenue for the first nine months of fiscal 2024 (9M FY2024) crept up 0.2% year on year to S$552.9 million but NPI slipped by 0.2% year on year to S$479.6 million.
DPU, however, increased by 0.7% year on year to S$0.06792.
MLT’s portfolio occupancy stood at 95.9% as of 31 December 2023 and the REIT registered a positive rental reversion of 3.8% for the quarter.
Aggregate leverage stood at 38.8% with 83% of the REIT’s debt pegged to fixed rates.
The REIT has an ongoing asset enhancement initiative at 51 Benoi Road that should be completed by 1Q 2025.
The REIT manager also divested eight properties in Malaysia, Singapore, and Japan in 9M FY2024, all at a premium to their valuation.
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Disclosure: Royston Yang owns shares of Frasers Logistics & Commercial Trust.
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