REITs
3 Singapore REITs That Raised Their Dividends in 2023
By Gerald Wong, CFA • 08 Mar 2024 • 0 min read
The share prices of Singapore REITs have been impacted by higher interest rates. Here are three rare Singapore REITs that managed to up their dividends last year despite industry headwinds.
In this article
What happened?
2023 was a watershed year for the REIT sector.
A sharp surge in interest rates, along with elevated levels of inflation, caused many REITs to experience a jump in operating and finance expenses.
The result is that more than three-quarters of the REITs that reported a decline in distribution per unit (DPU).
Even REITs that were seen to be resilient such as CapitaLand Ascendas REIT also reported a decline in dividends.
Earlier, we shared three Singapore REITs which reported an increase in dividends in the first nine months of 2023.
How does the scorecard look like for the whole of 2023?
Just six Singapore REITs reported an increase in DPU, including CapitaLand Integrated Commercial Trust, Parkway Life REIT, and Mapletree Logistics Trust.
In addition, hospitality trusts Far East Hospitality Trust, CapitaLand Ascott Trust and ARA US Hospitality Trust also saw an increase in dividends.
Let us find out more about the three non-hospitality related REITs that raised their dividends in 2023.
Three REITs that raised their dividends in 2023
#1 – CapitaLand Integrated Commercial Trust (CICT)
CICT is a retail cum commercial REIT with a portfolio of 26 properties spread across Singapore (21), Germany (2), and Australia (3).
Its total property value stood at S$24.5 billion as of 31 December and is managed by sponsor CapitaLand Investment Limited.
The REIT pulled off an admirable performance for 2023 with gross revenue rising by 8.2% year on year to S$1.56 billion.
The better performance arose because of full-year contributions from acquisitions back in the first half of 2022 along with higher rental income from existing properties.
Net property income (NPI) improved by 7% year on year to S$1.11 billion.
CICT’s DPU went up by 1.6% year on year to S$0.1075.
Aside from reporting higher revenue and DPU, CICT also boasted strong operating metrics
Its committed portfolio occupancy stood high at 97.3% with a portfolio weighted average lease expiry (WALE) of 3.4 years.
Both its retail and office divisions also enjoyed positive rental reversions of 8.5% and 9%, respectively, demonstrating the strong demand for its quality properties.
Meanwhile, tenant sales and shopper traffic continued to rise for CICT’s retail portfolio, increasing by 1.8% and 8.6% year on year, respectively.
The REIT manager intends to carry out an asset enhancement initiative (AEI) for the IMM Building costing S$48 million.
It will be conducted over four phases from the first quarter of 2024 and is expected to be completed in the third quarter of next year.
CICT is targeting a return on investment of around 8% for this AEI.
With the slight increase in dividends, CICT’s share price has been fairly resilient in the past 1 year, with a total return of 3.50% as of 8 March 2024.
This has allowed CICT to outperform most of the other REITs over this period.
Find out how much dividends you would have received as a shareholder of CICT in the past 12 months with the calculator below.
Learn more about CapitaLand Integrated Commercial Trust dividend history and dividend payment dates
#2 – Parkway Life REIT
Parkway Life REIT is a healthcare REIT with a portfolio of 63 properties worth around S$2.23 billion as of 31 December 2023.
Its portfolio comprises three private hospitals in Singapore, 59 nursing homes in Japan, and strata-titled lots/units in a specialist clinic in Kuala Lumpur, Malaysia.
Parkway Life REIT boasts an impressive track record of consecutive increases in its core DPU since its IPO in 2007.
2023 saw a continuation of this trend.
The healthcare REIT’s gross revenue increased by 13.5% year on year to S$147.5 million, aided by higher rental from the new master lease agreements for its Singapore hospitals coupled with acquisitions of nursing homes in both 2022 and 2023.
NPI did even better with a 14.1% year-on-year increase to S$139.1 million.
DPU crept up 2.7% year on year to S$0.1477.
Parkway Life REIT maintained a low gearing ratio of just 35.6%, allowing it sufficient debt headroom for more accretive acquisitions.
The REIT’s cost of debt was also low at just 1.27%.
Parkway Life REIT intends to tap into its strong network in Japan for further expansion while seeking out a third key market to grow the business.
With the consistent increase in dividends, Parkway Life REIT’s share price has been stable in the past 1 year, with a total return of 2.60% as of 8 March 2024.
This has allowed Parkway Life REIT to outperform most of the other REITs over this period.
Find out how much dividends you would have received as a shareholder of Parkway Life REIT in the past 12 months with the calculator below.
Learn more about Parkway Life REIT dividend history and dividend payment dates
#3 – Mapletree Logistics Trust (MLT)
MLT is an industrial REIT with a portfolio of 187 properties spread across eight countries.
Its total assets under management stood at S$13.3 billion as of 31 December 2023.
MLT’s fiscal year end is on 31 March, hence the REIT’s most recent financial statements were for the nine months ending 31 December 2023 (9M FY2024).
It was a mixed performance by the logistics REIT with 9M FY2024’s revenue inching up just 0.2% year on year to S$552.9 million.
The better performance came from acquisitions made in Japan, South Korea, and Australia long with higher rental income from properties in Singapore, but was offset by weak performance in China and the absence of revenue from properties that were sold or are undergoing redevelopment.
Currency weakness served as another headwind for MLT and caused its NPI for 9M FY2024 to dip by 0.2% year on year to S$479.6 million.
DPU, however, managed to edge up 0.7% year on year to S$0.06792.
MLT sported a resilient portfolio with attractive attributes.
Portfolio occupancy stood high at 95.9% as of 31 December 2023 with an average positive rental reversion of 3.8% for the quarter.
The REIT manager had concluded over S$900 million of acquisitions recently in modern, Grade A assets located in India, South Korea, Australia, and Japan.
MLT also has an ongoing AEI for a property located at 51 Benoi Road in Singapore.
Once completed in the first quarter of 2025, at an estimated development cost of S$205 million, it should see its gross floor area multiply by 2.3 times to 887,000 square feet.
Compared to CICT and Parkway Life REIT, Mapletree Logistics Trust’s share price has fallen more significantly over the past year
Mapletree Logistics Trust’s share price has fallen by 10.8% in the past 1 year. Including dividends paid, the REIT has generated a negative return of 5.7%.
Find out how much dividends you would have received as a shareholder of Mapletree Logistics Trust in the past 12 months with the calculator below.
Learn more about Mapletree Logistics Trust dividend history and dividend payment dates
What would Beansprout do?
It has been tough to identify REITs that increased their DPU for 2023.
With the difficult market environment, it is important to select REITs that have strong operational performance and are able to grow their distributions despite elevated interest rates.
Apart from looking at their fundamental strength, we will also examine their financial strength and valuation.
To learn more about how to choose the best REIT for your portfolio, check out our complete guide to Singapore REITs.
Of these three REITs, CapitaLand Integrated Commercial Trust currently offers a dividend yield of 5.6%, Parkway Life REIT offers a dividend yield of 4.2%, and Mapletree Logistics Trust offers a dividend yield of 6.1%.
In particular, we will be keeping a lookout for CapitaLand Integrated Commercial Trust as it might potentially divest some of its Singapore assets, which will help to reduce its debt levels and allow it to purchase high-quality assets from its sponsor.
Related links:
- CapitaLand Integrated Commercial Trust dividend history and dividend payment dates
- Parkway Life REIT dividend history and dividend payment dates
- Mapletree Logistics Trust dividend history and dividend payment dates
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