4 Top Singapore REITs to Watch for November

The Smart Investor2022-11-03 10:02

KEPPEL DC REIT

-1.69%

PARKWAYLIFE REIT

-2.03%

We feature four of our top REIT picks and why we think they can do well.

The REIT sector has shown itself to be a bastion of strength over the years.

Despite a string of adverse economic events over the past two decades, they have continued to churn out a steady stream of dividends for income-seeking investors.

However, this passive income stream is being threatened by the twin problems of high inflation and surging interest rates.

Still, REITs have dealt with such conditions before and the strong ones should prevail over the long term.

Here are four REITs we are watching in November.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, is a retail cum commercial REIT that owns 21 properties in Singapore, two in Germany, and three in Australia.

Total assets under management (AUM) stood at S$24.2 billion as of 31 December 2021.

CICT reported an encouraging set of results for its fiscal 2022’s third quarter (3Q2022) business update.

Gross revenue increased by 13.7% year on year to S$374.1 million while net property income (NPI) went up 12.7% year on year to S$273.3 million.

All three categories of properties – retail, office and integrated developments, saw improvements in both revenue and NPI for the quarter.

Portfolio committed occupancy stood at a healthy 95.1% as of 30 September 2022.

The portfolio also enjoyed positive rental reversions for the first nine months of 2022 (9M2022) in both its retail (+0.6% year on year) and office (+7.9% year on year) segments.

Aggregate leverage stood at 41.2% as of 30 September 2022 but the REIT had 80% of its borrowings on fixed rates to cushion against a spike in interest costs.

CICT”s trailing 12-month distribution per unit (DPU) stood at S$0.1044, giving its units a trailing distribution yield of 5.5%.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, owns a portfolio of 186 properties across eight countries with an AUM of S$12.9 billion as of 30 September 2022.

The logistics REIT reported a strong set of earnings for its fiscal 2023’s second quarter (2Q2023) ending 30 September 2022.

Gross revenue increased by 11.4% year on year to S$183.9 million while NPI rose 10.8% year on year to S$160 million.

DPU inched up 3.5% year on year to S$0.02248.

MLT’s trailing 12-month DPU stood at S$0.08969, giving its units a trailing distribution yield of 5.9%.

The REIT reported a high occupancy of 96.4% as well as a positive rental reversion of 3.5% for the quarter.

MLT’s gearing ratio was 37% and 82% of its loans were hedged or drawn at fixed rates.

The REIT conducted a strategic acquisition of two land parcels in Malaysia that it plans to redevelop to increase its existing plot ratio by five times. The target completion date for this project is the first quarter of 2027.

Parkway Life REIT (SGX: C2PU)

Parkway Life REIT is a healthcare REIT with 56 properties in Singapore, Japan and Malaysia with an AUM of around S$2.29 billion as of 31 December 2021.

The REIT released its 3Q2022 business update and reported a resilient set of numbers.

For 9M2022, gross revenue dipped slightly by 1.3% year on year to S$89 million.

However, NPI edged up 0.1% year on year to S$82.8 million.

DPU managed to grow by 1.5% year on year for 1H2022 to S$0.0706.

The REIT’s trailing 12-month DPU came in at S$0.1419, giving its units a trailing distribution yield of 3.6%.

Parkway Life REIT’s gearing stood at 34.7% with a very low cost of debt of 0.72%.

Around 73% of its interest rate exposure is hedged.

Keppel DC REIT (SGX: AJBU)

Keppel DC REIT is a data centre REIT that owns 23 data centres across nine countries.

The REIT’s AUM stood at S$3.6 billion as of 30 September 2022.

Keppel DC REIT managed to continue growing its distributable income and DPU for 3Q2022.

Gross revenue inched up 1.4% year on year to S$70.3 million.

Although NPI only crept up 0.5% year on year, distributable income increased by 9% year on year due to significantly higher finance income from the REIT’s investment in M1’s bonds and preference shares last year.

As a result, DPU rose 5% year on year to S$0.02585.

For 9M2022, Keppel DC REIT’s DPU climbed 3.4% year on year to S$0.07634.

Trailing 12-month DPU stood at S$0.10099, with the data centre REIT’s units offering a trailing distribution yield of 5.8%.

Portfolio occupancy strengthened to 98.7% from 98.2% three months ago and the weighted average lease expiry stood high at 8.7 years.

Aggregate leverage came in at 37.5% with nearly three-quarters of the REIT’s debt on fixed rates.

source：The Smart Investor