Year in Review: 3 Singapore REITs That Upped Their DPU in 2023


It has been an unusually tough year for REITs.

Interest rates have surged at their fastest pace in decades and REITs are grappling with higher finance costs that threaten to eat into their distributable income.

Coupled with elevated inflation levels, many REITs saw their staff and utility costs rise, resulting in lower distribution per unit (DPU).

However, there is a crop of REITs that has bucked this trend.

They have managed to post higher distributions despite the challenges faced by the sector.

We profile three Singapore REITs that announced higher DPU for this year.

Parkway Life REIT (SGX: C2PU)

Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 61 properties worth S$2.2 billion as of 30 September 2023.

The REIT reported a commendable financial performance during its third quarter 2023 (3Q 2023) business update.

For the first nine months of 2023 (9M 2023), gross revenue jumped 24.6% year on year to S$110.9 million.

Net property income (NPI) increased by 26.2% year on year to S$104.5 million.

These increases came about because of higher rent from PLife REIT’s Singapore properties under the new master lease agreement that commenced in August 2022.

The acquisition of five Japanese nursing homes in September 2022 also contributed to the increase.

DPU inched up 2.8% year on year to S$0.1099.

With this increase, PLife REIT has maintained an enviable record of rising core DPU without fail since its IPO in 2007.

The healthcare REIT’s gearing level stood at 36% as of 30 September 2023 and it had a low cost of debt of just 1.32%.

This level of gearing allows the REIT to rely on debt financing for more yield-accretive acquisitions.

The manager intends to leverage PLife REIT’s strong network in Japan to expand while seeking to build a third key market that can contribute to enhancing growth for the REIT over the long term.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, is an industrial REIT with a portfolio of 189 properties across eight countries such as Singapore, Australia, and China.

Its assets under management (AUM) stood at S$13.3 billion as of 30 September 2023.

The logistics-focused REIT recently released its first half of fiscal 2024 (1H FY2024) earnings ending 30 September 2023.

Gross revenue slipped 0.7% year on year to S$368.9 million while NPI slid 1% year on year to S$320.1 million.

The slightly weaker result was due to the depreciation of currencies such as the Chinese Yuan, Japanese Yen, Hong Kong Dollar and Australian Dollar against the Singapore Dollar.

Without this forex headwind, revenue and NPI would have grown by 6.1% and 5.7%, respectively.

DPU, however, edged up 0.5% year on year to S$0.04539 for 1H FY2024.

MLT is very active in rejuvenating its portfolio, with a total of four divestments completed or pending completion in the second quarter of FY2024.

In addition, the REIT also reported a high occupancy rate of 96.9% with a positive rental reversion of 0.2%.

Last month, MLT announced two more divestments – the first was of 10 Tuas Avenue 13 in Singapore for S$11.1 million and the second was for the divestment of two properties in Malaysia for around S$43.8 million.

Just this month, the logistics REIT conducted the acquisition of a modern Grade A warehouse in India for approximately S$14.5 million.

Far East Hospitality Trust (SGX: Q5T)

Far East Hospitality Trust, or FEHT, is a hospitality trust with a portfolio of 12 properties totalling 3,015 hotel rooms and serviced residences,

The value of these properties stood at S$2.45 billion as of 31 December 2022.

FEHT enjoyed a strong tourism recovery that led to a 26.9% year-on-year rise in gross revenue for the first half of 2023 (1H 2023) to S$52 million.

NPI shot up 30.7% year on year to S$49 million.

Distribution per stapled security leapt 24.7% year on year to S$0.0192.

This momentum has carried into 3Q 2023 with the hospitality trust reporting a 42.5% year-on-year jump in gross revenue to S$30.2 million.

NPI climbed 42.4% year on year to S$28.1 million with distributable income surging by 51% year on year to S$22.9 million.

FEHT remains one of the lowest-geared REITs with an aggregate leverage of just 32.2%.

Its average cost of debt stood at 3.2% with 40.6% of its loans pegged to fixed rates.

The manager of FEHT will utilise the incentive fee of S$18 million from the divestment of Central Square to cushion the impact of higher rates.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.





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