3 Singapore REITs that demonstrated resilience in 2023

What happened?

As 2023 comes to an end, the asset class that has been rocked the hardest is the REIT sector.

Faced with the twin challenges of high inflation and surging interest rates, investors have turned their backs on the sector as worries mount over their ability to maintain their distributions.

Unsurprisingly, the resultant sell-down has caused many REITs such as OUE Commercial REIT and Mapletree Pan Asia Commercial Trust  to plunge to their 52-week or all-time lows.

The iEdge S-REIT index, which is widely regarded as the benchmark for Singapore REITs, saw a total return of negative 9% year-to-date through 31^st October 2023, before rebounding in recent weeks on expectations of interest rate cuts. 

Earlier, we looked at three Singapore blue chip stocks that have a track record of paying out consistent dividends to shareholders.

This led to questions about whether there is still a crop of REITs that have weathered this storm and posted year-to-date (YTD) gains.

Here are the three REITs that demonstrated resilience in a difficult 2023.

3 Singapore REITs that demonstrated share price resilience in 2023

#1 – Frasers Hospitality Trust (SGX: ACV)

Frasers Hospitality Trust, or FHT, is a global hotel and serviced residence trust with a portfolio of 14 assets across nine cities in Asia, Australia, and Europe.

Frasers Hospitality Trust assets under management stood at approximately S$1.93 billion as of 30 September 2023.

The hospitality trust’s units have risen by 11.1% YTD, making it the best performer in the REIT space this year.

The surge in demand for air travel along with pent-up demand for vacations led to Frasers Hospitality Trust reporting a sparkling set of results for its fiscal 2023 (FY2023) ending 30 September 2023.

Gross revenue jumped 28.5% year on year to S$123.2 million while net property income (NPI) surged 30.1% year on year to S$90.5 million.

Distribution per stapled security (DPSS) soared 49.3% year on year to S$0.024426.

Metrics such as revenue per available room (RevPAR) and occupancy rates climbed during the fiscal year.

For Singapore, the occupancy rate ended at 80% for FY2023 with RevPAR climbing from S$263 to S$316.

Sydney saw its occupancy rate rise from 74% in FY2022 to 82% in FY2023 with RevPAR increasing from S$176 to S$191.

Looking ahead, management of Frasers Hospitality Trust intends to unlock value for unitholders via opportunistic divestments while growing via yield-accretive acquisitions.

With gearing at 34% and an effective cost of borrowing at 3.1%, Frasers Hospitality Trust has ample opportunities to tap into debt for acquisitions in the coming fiscal year.

#2 – Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust’s share price has risen by 8.8% YTD, making it one of the best performing Singapore REITs this year.

Mapletree Industrial Trust is an industrial REIT with a portfolio of 142 properties across six property segments such as business parks, data centres, and hi-tech parks.

The REIT has a presence in the US, Singapore, and Japan with an AUM of S$9.2 billion as of 30 September 2023.

Mapletree Industrial Trust reported a mixed set of earnings for the first half of fiscal 2024 (1H FY2024) ending 30 September 2023.

Gross revenue inched up 0.4% year on year to S$344.7 million but NPI slipped by 0.3% year on year to S$259.4 million.

Distribution per unit (DPU) fell by 2% year on year to S$0.0671 because of an enlarged base of units following an equity fundraising exercise and the application of the distribution reinvestment plan for four quarters.

Mapletree Industrial Trust has also been expanding its portfolio of datacentre assets.

The REIT had just concluded its maiden acquisition of a 98.5% effective stake in a data centre in Osaka, Japan, for around S$507.9 million.

This property is fully occupied and the acquisition was completed on 28 September 2023 with rental income to flow to the REIT from the third quarter of FY2024 onwards.

The portfolio also enjoyed positive rental reversions of 8.8% for renewal leases.

Mapletree Industrial Trust's gearing level stood at 37.9% as of 30 September 2023 with 79.2% of its debt on fixed rates.

Its cost of funding has also fallen from 3.5% in the previous quarter to 3.2% in the current quarter.

CEO Tham Kuo Wei intends to continue with portfolio rebalancing by making selective divestments of non-core assets while scouting for accretive acquisitions.

#3 – CapitaLand Ascendas REIT (SGX: A17U)

CapitaLand Ascendas REIT’s share price increased by 8.4% YTD, making it stand out within the REITs sector.

CapitaLand Ascendas REIT is Singapore’s oldest industrial REIT with a portfolio of 230 properties spread across Singapore, the UK, Australia, Europe, and the US.

CapitaLand Ascendas REIT ’s AUM as of 30 September 2023 stood at S$17.2 billion.

CapitaLand Ascendas REIT also reported a mixed set of earnings for the first half of 2023 (1H 2023).

Revenue rose 7.7% year on year to S$718.1 million, aided by newly acquired properties in Singapore and the US.

NPI improved by 6.7% year on year to S$508.8 million but DPU slid 2% year on year to S$0.07719 because of a larger unit base following a private placement in May 2023.

Despite the weaker DPU, CapitaLand Ascendas REIT reported healthy portfolio operating metrics during its 3Q 2023 business update.

Occupancy stood high at 94.5% while the portfolio’s rental reversion was positive at 10.2% for the quarter.

Meanwhile, the industrial REIT completed a data centre acquisition in the UK for S$209.4 million during 3Q 2023, bringing the total value of acquisitions to date to S$724.3 million.

An asset enhancement initiative at The Alpha in Singapore was also completed for S$15.5 million.

The manager of CapitaLand Ascendas REIT  is active in improving the REIT’s portfolio quality, with four ongoing projects worth S$600 million that involve redevelopments and a convert-to-suit property.

What would Beansprout do?

The three REITs featured above have something in common – they all have a strong sponsor.

FHT has a solid sponsor in Frasers Property Limited, Mapletree Industrial Trust has a reputable sponsor in multi-billion-dollar property investment firm Mapletree Investments Pte Ltd, while CLAR’s sponsor is property giant CapitaLand Investment Limited.

With these sponsors helming these REITs, it is perhaps not surprising that they have come out the strongest this year among the Singapore REITs.

Strong sponsors not only allow the REITs to borrow at favourable rates, but they also possess a pipeline of properties that can be slowly injected into the REIT, thereby helping it to grow steadily.

Apart from looking at the sponsor of the REIT, it is also important to select REITs that have strong operational performance, financial strength and attractive valuation.

To learn more about how to choose the best REIT for your portfolio, check out our complete guide to Singapore REITs. 

Also, use our REIT comparison tool to compare Frasers Hospitality Trust, Mapletree Industrial Trust and CapitaLand Ascendas REIT compare with other REITs. 

Related links:

• Frasers Hospitality Trust analysis and dividend history
• Mapletree Industrial Trust analysis and dividend history
• CapitaLand Ascendas REIT analysis and dividend history