Worried About Troubles in the REIT Sector? These 4 Singapore REITs Should Provide Peace of Mind

Royston Yang

17 June 2024 at 7:30 pm·5-min read

It’s no secret that the REIT sector has been buffeted by headwinds in the past two years.

A combination of rising interest rates and surging inflation have led to persistent pessimism for the sector.

Despite these troubles, we believe that REITs still qualify as attractive income instruments that can pay you regular dividends.

You need to look for REITs with strong sponsors, high-quality properties that are in high demand, and a stellar track record of consistent distributions.

Here are four Singapore REITs that should continue to do well and provide income investors with peace of mind.

Parkway Life REIT (SGX: C2PU)

Parkway Life REIT, or PLife REIT, is a healthcare REIT with 63 properties in its portfolio valued at approximately S$2.2 billion.

Its portfolio comprises three Singapore hospitals, 59 Japanese nursing homes, and a strata-titled specialist centre in Kuala Lumpur, Malaysia.

The healthcare REIT has a strong sponsor in IHH Healthcare Berhad (SGX: Q0F), which owns multiple hospitals in Singapore, Malaysia, and Turkey and has a market capitalisation of S$15.2 billion as of 29 March 2024.

For the first quarter of 2024 (1Q 2024), PLife REIT enjoyed near full portfolio occupancy at 99.7%.

The healthcare REIT’s core distribution per unit (DPU) has increased without fail since its IPO in 2007.

The REIT has continued this track record into 1Q 2024.

Gross revenue and net property income (NPI) fell by 2.7% and 2.8% year on year, respectively, to S$36.2 million and S$34.3 million.

DPU, however, rose 4% year on year to S$0.0379.

The REIT has a gearing level of 36.4% with a low cost of debt of just 1.3%, allowing it sufficient debt headroom for further acquisitions.

Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and one in Japan.

The REIT’s assets under management (AUM) stood at S$8.9 billion as of 31 March 2024.

MIT also boasts a strong sponsor in Mapletree Investments Pte Ltd (MIPL), a global real estate development, investment, and management company.

MIPL owns and manages S$77.5 billion of assets as of 31 March 2024.

The industrial REIT reported a resilient set of earnings for its fiscal 2024 (FY2024) ending 31 March 2024.

Gross revenue inched up 1.8% year on year to S$697.3 million while NPI edged up 0.6% year on year to S$521 million.

DPU slipped by 1% year on year to S$0.1343.

The REIT manager completed the fitting out of its recently-acquired Osaka data centre on 9 February and also carried out capital recycling activities by divesting its Tanglin Halt Cluster property in late March.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial trust with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.

The REIT’s portfolio’s AUM stood at S$24.5 billion as of 31 December 2023.

CICT has a solid sponsor in real estate giant CapitaLand Investment Limited (SGX: 9CI).

Revenue climbed 8.2% year on year for 2023 to S$1.6 billion with NPI rising 7% year on year to S$1.1 billion.

DPU for the year crept up 1.6% year on year to S$0.1075.

CICT has continued with its robust performance for 1Q 2024.

Revenue rose 2.6% year on year to S$398.6 million with NPI rising by 6.3% year on year to S$293.7 million.

The REIT’s committed portfolio occupancy stood high at 97% with 76% of its borrowings on fixed rates, thus mitigating a sharp rise in finance costs.

1Q 2024 also saw a positive rental reversion of 7.2% for CICT’s retail portfolio along with a 14.1% positive reversion for its office properties division.

The REIT manager has also undertaken asset enhancement initiatives (AEIs) for the IMM Building in Singapore and the Gallileo in Frankfurt.

Frasers Centrepoint Trust (SGX: J69U)

Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and one office building.

The REIT’s AUM stood at approximately S$7.1 billion as of 31 March 2024.

FCT is supported by a strong sponsor in real estate conglomerate Frasers Property Limited (SGX: TQ5), or FPL.

FPL has total assets of around S$40.1 billion as of 31 March 2024.

The REIT reported a slightly weaker set of earnings for its first half of fiscal 2024 (1H FY2024) ending 31 March.

Revenue fell by 7.2% year on year to S$172.2 million while NPI tumbled by 8.4% year on year to S$124.6 million.

The declines were because of the divestment of Changi City Point in October last year along with ongoing AEI works at Tampines 1 Mall.

Excluding these, revenue and NPI would have registered healthy year-on-year growth of 2.9% and 2.1%, respectively.

For 1H FY2024, DPU dipped by 1.8% year on year to S$0.06022.

FCT’s portfolio occupancy stood high at 99.9% with a positive rental reversion of 7.5% for the latest quarter.

In our latest report, we dive into five standout Singapore REITs offering distribution yields exceeding 5.5%. Why settle for less? Get more dividends hitting your bank account with our REITs guide. Click here to download for free now.

Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.

The post Worried About Troubles in the REIT Sector? These 4 Singapore REITs Should Provide Peace of Mind appeared first on The Smart Investor.

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Parkway Life REIT (SGX: C2PU)

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