Interest Rates Poised to Fall: 4 Singapore REITs That May Announce Acquisitions to Grow Their DPU

The Smart Investor09-19

[ Share Facebook Twitter LinkedIn Email WhatsApp Investors are waiting with bated breath for the first interest rate cut by the US Federal Reserve since 2020. As a recap, interest rates ...

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0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nInterest Rates Poised to Fall: 4 Singapore REITs That May Announce Acquisitions to Grow Their DPU\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-19 07:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://thesmartinvestor.com.sg/interest-rates-poised-to-fall-4-singapore-reits-that-may-announce-acquisitions-to-grow-their-dpu/><strong>The Smart Investor</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>[\n\n\n\nShare\n\n\nFacebook\n\nTwitter\n\nLinkedIn\n\nEmail\n\nWhatsApp\n\n\n\n\n\nInvestors are waiting with bated breath for the first interest rate cut by the US Federal Reserve since 2020.\nAs a recap, interest rates ...</p>\n\n<a href=\"https://thesmartinvestor.com.sg/interest-rates-poised-to-fall-4-singapore-reits-that-may-announce-acquisitions-to-grow-their-dpu/\">Source 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relief.\nThis asset class has taken it on the chin over the past two years as higher finance costs crimped distributable income, resulting in lower year-on-year distributions.\nLower interest rates also mean that REITs can undertake more acquisitions to grow their distributions.\nHere are four Singapore REITs that may announce more acquisitions in due course.\nKeppel DC REIT (SGX: AJBU)\nKeppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across 10 countries.\nThe REIT’s assets under management (AUM) stood at S$3.9 billion as of 30 June 2024.\nKeppel DC REIT has a good track record of acquisitions, with its most recent being the purchase of a data centre in Tokyo, Japan, for S$201 million back in July this year.\nThis acquisition is the REIT’s maiden foray into Japan and the data centre provides potential positive rental reversion because the current rent was committed in the mid-2010s.\nThe purchase is also a yield-accretive one that will increase the REIT’s pro-forma distribution per unit (DPU) for 2023 by 1.1% to S$0.09488.\nBefore this acquisition, Keppel DC REIT had purchased two data centres in Guangdong, China, back in June 2022.\nThe REIT reported a mixed performance for the first half of 2024 (1H 2024) because of problems with its tenant in these China data centres.\nGross revenue rose 11.9% year on year to S$157.2 million while net property income (NPI) inched up 4.2% year on year to S$132.6 million.\nDPU, however, fell by nearly 10% year on year to S$0.04549.\nKeppel DC REIT has more than S$2 billion of potential data centres for acquisition from its blue-chip sponsor Keppel Ltd (SGX: BN4).\nFrasers Centrepoint Trust (SGX: J69U)\nFrasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and one office building.\nThe REIT’s AUM was approximately S$7.1 billion as of 30 June 2024.\nFCT has been active in acquisitions from 2022 till the present and with interest rates heading lower, the retail REIT may find more opportunities to purchase stakes in retail malls.\nBack in September 2022, FCT acquired an additional 10% stake in Waterway Point Mall in Punggol, raising its stake to 50%.\nThen, in January 2023, FCT partnered with its sponsor Frasers Property Limited (SGX: TQ5) to jointly acquire a 50% interest in NEX Mall in Serangoon for S$652.5 million.\nFCT ended up with a 25.5% interest in NEX post-acquisition.\nEarlier this year in January, FCT topped up its interest in NEX Mall to 50% through the acquisition of an additional 24.5% effective interest in the popular suburban mall.\nFCT’s latest business update for the third quarter of fiscal 2024 was also encouraging.\nThe retail REIT reported a high occupancy rate of 99.7% and also saw its Tampines 1 Mall achieve 100% committed occupancy post-asset enhancement initiative (AEI).\nMapletree Logistics Trust (SGX: M44U)\nMapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 188 properties across eight countries as of 30 June 2024.\nMLT’s AUM stood at around S$13.4 billion.\nThe manager of MLT is active in capital recycling and portfolio rejuvenation and has been undertaking selected divestments and choice acquisitions over the last three years.\nBack in fiscal 2024 (ending 31 March 2024), a total of S$1.1 billion was spent acquiring 12 modern, grade A assets.\nFor the first quarter of fiscal 2025, MLT continued this streak by acquiring three logistics properties in Malaysia and Vietnam.\nThe REIT has been active in acquisitions and should interest rates fall, the manager should find more opportunities to acquire yield-accretive logistics assets.\nCapitaLand Integrated Commercial Trust (SGX: C38U)\nCapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 Singapore properties, two German properties, and three Australian properties.\nCICT’s AUM stood at S$24.5 billion as of 31 December 2023.\nThe REIT reported a strong set of financial results for 1H 2024 with gross revenue rising 2.2% year on year to S$792 million.\nNPI jumped 5.4% year on year to S$582.4 million while DPU climbed 2.5% year on year to S$0.0543.\nEarlier this month, CICT announced the acquisition of a 50% interest in ION Orchard Mall for S$1.85 billion.\nThis acquisition is projected to increase its 1H 2024 DPU by 0.9% to S$0.0548 and will be partially funded by an equity fundraising exercise involving a private placement and a preferential offering of units.\nBefore this acquisition, CICT’s last acquisition was way back in March 2022 before interest rates began their steep ascent.\nThis acquisition involved the purchase of a 70% stake in 70 Robinson Road for S$1.26 billion which was later renamed “CapitaSky”.\nWith CICT’s financial clout and the presence of a strong sponsor in CapitaLand Investment Limited (SGX: 9CI), the manager of the REIT should be able to find attractive acquisition opportunities should interest rates decline.\nAttention Dividend Investors: Now’s the time to tap into high-yield REITs in Singapore. We’ve just released our latest report, revealing the full details on five Singapore REITs, each boasting distribution yields of 5.5% or higher.  With a focus on stability and performance, these REITs could be the missing piece in your dividend-focused portfolio. Download the FREE report now to unlock these high-yield treasures.\nFollow us on Facebook and Telegram for the latest investing news and analyses!\nDisclosure: Royston Yang owns shares of Keppel DC REIT.\n\n\n\nYahoo\n]","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2468564398"}