It is no secret that the REIT sector has been badly battered this year.
The twin worries of high inflation and a sharp spike in interest rates have dampened sentiment for this asset class.
Despite these troubles, several REITs managed to defy the odds as their unit prices scaled a 52-week high.
We shine the spotlight on three of these REITs and try to determine if they can continue their strong performance as we head into 2024.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 142 properties across six different sub-types.
These properties are in Singapore (85), the US (56) and Japan (1) and the portfolio has assets of management (AUM) of S$9.2 billion as of 30 September 2023.
Shares of MIT recently touched a 52-week high of S$2.47 and are up 7.5% year-to-date (YTD), closing at S$2.43 recently.
For the first half of fiscal 2024 (1H 2024) ending 30 September 2023, the industrial REIT posted a mixed set of earnings.
Gross revenue inched up 0.4% year on year to S$344.7 million but net property income (NPI) dipped by 0.3% year on year to S$259.4 million.
Distribution per unit (DPU) slid 2% year on year to S$0.0671.
One reason for the lower DPU is because of an enlarged base of units arising from an equity fundraising exercise in 1Q FY2024 and distribution reinvestment plans for four quarters up till 3Q FY2023.
MIT had just completed its maiden acquisition of a data centre in Osaka, Japan, for S$507.9 million.
This acquisition was completed on 28 September and rental income will accrue to the REIT in the current quarter.
Portfolio occupancy remained high at 93.2% for 1H FY2024 and the portfolio also enjoyed positive rental reversions of 8.8% for renewal leases.
Keppel REIT (SGX: K17U)
Keppel REIT is an office REIT with a portfolio of 12 properties in Singapore (4), Australia (6), South Korea (1) and Japan (1).
Its AUM stood at S$9.2 billion as of 30 September 2023.
Keppel REIT recently touched a 52-week high of S$0.98 and is up 1.1% YTD at S$0.93 currently.
The REIT recently released its third quarter 2023 (3Q 2023) business and operational update.
Property income rose 5% year on year to S$172.6 million for the first nine months of 2023 (9M 2023), led by higher rentals and portfolio occupancy.
NPI attributable to unitholders edged up 0.3% year on year to S$120.4 million.
A 20.3% year-on-year jump in borrowing costs resulted in distributable income falling by 10.3% year on year to S$148.6 million.
However, Keppel REIT had declared an anniversary distribution of S$5 million per quarter and when added to distributable income, the decline was just 1.1% year on year to S$163.6 million.
The office REIT’s occupancy rate stood high at 95.9% as of 30 September 2023.
Aggregate leverage was 39.5% with a low cost of borrowing of 2.85%.
The manager intends to improve yield by enhancing the REIT’s portfolio of assets through acquisitions and divestments.
The REIT will also engage in proactive leasing and implement cost management strategies to mitigate rising costs.
Daiwa House Logistics Trust (SGX: DHLU)
Daiwa House Logistics Trust, or DHLT, is a logistics REIT with a portfolio of 16 properties located in Japan that enjoy full occupancy.
The portfolio’s value stood at around S$800 million as of 31 December 2022 with a weighted average lease expiry of 6.3 years by gross rental income.
DLHT touched its 52-week high of S$0.66 recently but its shares are still down 3.1% YTD at S$0.63 at present.
For 9M 2023, gross rental income rose 4.9% year on year to JPY 4.1 billion while NPI improved by 3.9% year on year to JPY 3.5 billion.
Distributable income rose 2.2% year on year to S$27 million.
The REIT also enjoyed a 100% lease renewal rate since its listing in 2021.
Aggregate leverage stood at 36.2% as of 30 September 2023, opening the REIT for more yield-accretive acquisitions by tapping into debt financing.
DHLT’s cost of debt was very low at just 0.99% with all its loans pegged to fixed rates, thus mitigating the impact of rising interest rates.
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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.