Top 3 Singapore REITs of 2024

What happened?

The REIT sector has struggled this year, with persistently high interest rates continuing to weigh on distributions. 

I shared earlier that mixed fundamentals across various sub-segments have also created additional challenges for REITs.

Yet, despite the overall weak sentiment, there are pockets of strong performance worth noting.

We’ve analysed the sector to identify the three best-performing Singapore REITs of the year. 

The top performer has delivered a share price increase of more than 15% in 2024, though it still lags behind the gains in the Straits Times Index (STI) and the best-performing blue-chip stocks.

Let’s dive in to explore which REITs have stood out and what’s driving their performance.

The 3 best-performing Singapore REITs in 2024

Here are 3 best-performing blue-chip stocks as of 6 December 2024.

#1 – Cromwell European REIT (SGX: CWBU)

Cromwell European REIT invests in commercial real estate assets across Europe with the majority of its properties in the logistics and light industrial sectors.

Cromwell European REIT ’s portfolio is worth €2.2 billion and comprises 100+ predominantly freehold properties in countries such as France, Poland, Finland, Denmark, Italy, and the UK.

The European REIT’s unit price has shot up 16.3% year-to-date to €1.64 as of 6 December 2024 , making it the best-performing Singapore REIT (S-REIT) this year.

Cromwell European REIT reported a downbeat performance for the first nine months of 2024 (9M 2024).

Gross revenue stood at €160.2 million, dipping by 1.1% year on year mainly due to divestments.

Net property income (NPI) slipped by 0.8% year on year to €100 million.

Distributable income, however, fell by nearly 9% year on year to €60.4 million because of both divestments and higher finance costs.

Despite the lower distributable income, Cromwell European REIT  maintained a high portfolio occupancy rate of around 94% as of 30 September 2024.

The portfolio also enjoyed a positive rental reversion of 2.3% for the third quarter of 2024 (3Q 2024).

The Europe-focused REIT also sported a net gearing ratio of 39.7% along with an interest coverage ratio of 3.6 times.

The all-in cost of debt for the REIT stood at 3.16%, dipping slightly below the 3.19% at the end of last year.

Cromwell European REIT has a €200 million development pipeline (see below) slated for redevelopment of extensive refurbishment.

Once completed, these developments should help the REIT to register organic rental growth.

Management’s key priorities moving forward include active tenant management, driving positive rental reversion, and completing the remaining ~€70 million of non-strategic divestments.

Find out how much dividends Cromwell European REIT is expected to pay in the coming year based on current market forecasts. 

Related links:

• Cromwell European REIT share price history and share price target
• Cromwell European REIT dividend history and dividend forecast

Related reports:

• Cromwell European REIT – Stabilisation of asset values with interest rate cuts
• Singapore REITs Sector – Navigating opportunities in European S-REITs
• Singapore REITs Sector - What we learnt from our dialogue with European S-REITs

#2 – Keppel DC REIT (SGX: AJBU)

Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across 10 countries.

The REIT has total assets under management (AUM) of S$3.9 billion as of 30 September 2024.

The data centre REIT saw its unit price climb 15.2% year-to-date as of 6 December, putting it in second place among S-REITs.

Keppel DC REIT reported an encouraging set of earnings for 3Q 2024.

Gross revenue rose 8.9% year on year to S$76.9 million, aided by positive rental reversions including a >40% reversion for a major Singapore contract renewal.

Property expenses more than doubled year on year after factoring in the loss allowance from the REIT’s Guangdong data centres.

As a result, NPI slipped by 0.2% year on year to S$64.5 million.

DPU, however, managed to eke out a small 0.4% year-on-year increase to S$0.02501 because of a year-on-year jump in finance income from Keppel DC REIT’s subscription of an Australian data centre note.

Last month, the data centre REIT announced the acquisition of two data centres – SGP 7 and SGP 8, from its sponsor Keppel Ltd.

These two assets are AI-ready hyperscale data centres that will capitalise on the growing demand for AI data centres.

This acquisition will increase Keppel DC REIT’s AUM to S$5.2 billion with Singapore as its core with an AUM of S$3.4 billion (65.5%).

The REIT will recognise an immediate DPU accretion of 8.1% for its first half of 2024 DPU, increasing it from S$0.04549 to S$0.0492.

Keppel DC REIT undertook a private placement and preferential offer as part of its fundraising exercise (70%), with the remainder of the proceeds to be funded by debt (30%).

Aggregate leverage should decline from the current 39.7% to 33.3% post-acquisition.

Find out how much dividends Keppel DC REIT is expected to pay in the coming year based on current market forecasts. 

Related links:

• Keppel DC REIT share price history and share price target
• Keppel DC REIT dividend history and dividend forecast

Related reports:

• Keppel DC REIT Preferential Offering – What should investors do?

#3 – Elite UK REIT (SGX: MXNU)

Elite UK REIT is a REIT with a portfolio of mostly freehold properties located in town centres and near amenities in the UK.

The REIT is also one of the largest providers of social infrastructure to the Department for Work and Pensions (DWP) and its portfolio has a total asset value of £415 million as of 30 June 2024.

Elite UK REIT’s unit price rose 7.1% year-to-date as of 6 December, and this rise is good enough to put the REIT in third place among the S-REITs.

The REIT reported a commendable set of financial numbers for its 9M 2024 business update.

Although revenue dipped slightly from £28.5 million to £28 million, distributable income crept up 2.8% year on year to £14 million for 9M 2024.

DPU inched up 3.9% year on year to £0.0213.

Elite UK REIT saw a steady decline in its gearing ratio from 47.5% at the end of last year to 43.6%.

The cost of debt has also dipped from 5.2% to 5% over the same period and the REIT manager has increased the proportion of fixed-rate debt from 63% to 87%.

The REIT manager is implementing the 3 “R” strategy of relet, recycle, and repositioning to realise value for unitholders.

This strategy involves unlocking value from £40.2 million of assets as well as expanding the REIT’s investment strategy.

New areas of focus include student living and the build-to-rent residential sectors.

For this year and the next, management will focus on capital recycling (to lower gearing), proactive asset management, and the extension and diversification of leases.

Find out how much dividends Elite UK REIT is expected to pay in the coming year based on current market forecasts. 

Related links:

• Elite UK REIT share price history and share price target
• Elite UK REIT dividend history and dividend forecast

Related reports:

• Elite UK REIT – Room for positive asset repricing
• Singapore REITs Sector – Navigating opportunities in European S-REITs
• Singapore REITs Sector - What we learnt from our dialogue with European S-REITs

What would Beansprout do?

This trio of REITs has done well this year with their share prices seeing healthy gains year-to-date.

This achievement came despite the general weak sentiment towards the REIT sector.

All three REITs have also seen some positive signs of a turnaround in their distributions. 

Keppel DC REIT and Elite UK REIT’s distributions have turned positive in the most recent quarter, while Cromwell European REIT has seen some stabilisation in its asset value. 

In addition, all three REITs have shared a medium-term strategy in place to continue to grow their distributions.

Despite their share price gains in 2024, analysts are still expecting further potential upside to their share prices. Elite UK REIT is expected to offer the highest potential upside of 30% to the consensus share price target as of 23 December 2024. 

This is followed by Cromwell European REIT which has a potential upside of 23% to the consensus share price target, while Keppel DC REIT has a potential upside of 9% to the consensus share price target. 

Across the three REITs, Elite UK REIT is expected to offer the highest dividend yield of 10.5%. This is followed by Cromwell European REIT which is expected to offer a dividend yield of 9.4%. On the other hand, Keppel DC REIT is expected to offer a dividend yield of 4.2%. 

Based on the above, it might be worthwhile adding Cromwell European REIT and Elite UK REIT to your watchlist if you are looking for income stocks to diversify your portfolio. 

You can also screen for the REITs with the highest potential upside to the consensus share price target and highest dividend yield using our best Singapore REIT screener. 

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