In a Climate of Uncertainty, These 4 Singapore REITs Can Give You Peace of Mind
It has not been an easy time for investors.
Last year’s soaring inflation was a dampener for consumer spending, though this was somewhat offset by many countries reopening their borders for air travel.
To make things worse, soaring interest rates have also raised borrowing costs for individuals and businesses alike.
The REIT sector has also been under pressure because of these two headwinds.
However, investors should not lose faith in REITs just because of tough times.
The key is to look for those with quality assets, a stellar track record of increasing distribution per unit (DPU), and strong sponsors.
Here are four Singapore REITs that should give you peace of mind as you navigate the choppy investment landscape.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across nine countries worth S$3.7 billion as of 31 December 2022.
The REIT boasts a strong sponsor in Keppel T&T, which is a wholly-owned subsidiary of blue-chip conglomerate Keppel Corporation Limited (SGX: BN4).
Keppel DC REIT also boasts a solid track record of consecutive rises in DPU.
DPU went from just S$0.0651 in 2015 to S$0.10214 in 2022, with gross revenue more than doubling and net property income (NPI) almost tripling during this period.
The better performance for 2022 was because of the acquisitions of two data centres in Guangdong, China, as well as a London data centre and the Eindhoven Campus.
The REIT’s aggregate leverage stood at just 36.4% as of 31 December 2022, offering more room to tap on debt for further expansion.
Sponsor Keppel T&T and Keppel Corporation’s private data centre funds have a pipeline of more than S$2 billion that can potentially be injected into Keppel DC REIT.
Demand for data centres is set to remain resilient, with end-user spending on cloud services projected to grow by 20.7% year on year in 2023 to around US$592 billion.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, has a portfolio of 186 logistics properties located in eight countries with an asset under management (AUM) of S$12.6 billion as of 31 December 2022.
The REIT has pulled off an admirable performance for the first nine months of fiscal 2023 (9M FY 2023) ending 31 December 2022.
Gross revenue rose 11.3% year on year to S$551.7 million while NPI improved by 10.4% year on year to S$480.4 million.
DPU inched up 3.4% year on year to S$0.06743.
In addition, MLT is also managed by a wholly-owned subsidiary of Mapletree Investments Pte Ltd, a global property management company with S$78.7 billion of AUM as of 31 March 2022.
The REIT maintained a high occupancy rate of 96.9% and also reported an average positive rental reversion of 2.9% for the third quarter of fiscal 2023.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a commercial cum retail REIT that owns 21 properties in Singapore, two in Germany, and three in Australia.
Its AUM stood at S$24.2 billion as of 31 December 2022.
CICT boasts a strong sponsor in real estate giant CapitaLand Investment Limited (SGX: 9CI).
For 2022, the REIT saw its gross revenue rise 10.5% year on year to S$1.4 billion.
NPI improved by 9.7% year on year to S$1 billion while DPU increased from S$0.104 in 2021 to S$0.1058 in 2022.
CICT saw a stable occupancy rate of 95.8% and also enjoyed a diversified tenant mix, with no single tenant making up more than 5% of its gross rental income.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, has a well-diversified portfolio of 105 logistics and commercial properties worth S$6.7 billion as of 31 December 2022.
FLCT has a reputable sponsor in Frasers Property Limited (SGX: TQ5), a listed real estate group with total assets of S$40.2 billion as of 30 September 2022.
The aggregate leverage for the REIT remained low at just 27.9% with a low cost of debt of 1.7%.
Moreover, 78.7% of FLCT’s loans are on fixed rates and the REIT has debt headroom of S$3.1 billion to conduct further acquisitions.
The REIT also enjoys a well-spread-out tenant base with the top 10 tenants taking up just a quarter of the total gross rental income.
The occupancy rate remained healthy at 95.9% and rental reversions hit 11% for the REIT’s latest quarter.
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Disclosure: Royston Yang owns shares of Keppel DC REIT and Frasers Logistics & Commercial Trust.
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