SINGAPORE: The Real Estate Investment Trust (REIT) sector has weathered its share of challenges over the past few years, grappling with rising interest rates and inflation. However, with the US Federal Reserve reducing rates by a percentage point in 2024, the landscape could shift again in favour of REITs.
According to a recent Smart Investor article, despite past hurdles, REITs have remained a cornerstone for income-focused investors, thanks to their legal obligation to distribute at least 90% of earnings as dividends. Here are four standout Singapore-listed REITs poised to deliver reliable income and long-term growth:
Parkway Life REIT
Sector: Healthcare
Parkway Life REIT (SGX: C2PU) manages 64 properties, including Singapore hospitals, Japanese nursing homes, and clinics in Malaysia. As of September 2024, its portfolio was valued at S$2.25 billion.
The REIT recently expanded into Europe by acquiring 11 nursing homes in France, adding to its income-generating assets. Despite a slight dip in gross revenue (-2.2%), its distribution per unit (DPU) rose by 2.8%. With low debt costs (1.36%) and manageable gearing at 37.5%, Parkway Life REIT offers strong defensive qualities and steady returns.
Keppel DC REIT
Sector: Data Centers
Keppel DC REIT (SGX: AJBU) specializes in data centres. It manages 23 facilities in 10 countries and has a portfolio worth S$3.9 billion.
In November 2024, it bolstered its portfolio by acquiring two fully leased data centres in Singapore. While net property income dipped slightly in 3Q 2024, the REIT maintains solid growth potential, with its gearing expected to fall to 33.3%. Supported by sponsor Keppel Ltd., Keppel DC REIT is set to capitalize on the growing demand for digital infrastructure.
Frasers Centrepoint Trust
Sector: Retail
Frasers Centrepoint Trust (SGX: J69U) owns nine retail malls and an office building valued at S$7.1 billion as of FY2024. Key properties like Hougang Mall and Waterway Point boast high occupancy rates (99.7%) and strong foot traffic.
Although revenue declined 4.9% due to asset sales and enhancements, rental reversions were positive at 7.7%. With its solid sponsor, Frasers Property Limited, and healthy gearing of 38.5%, Frasers Centrepoint Trust offers resilience and growth potential.
CapitaLand Ascott Trust
Sector: Lodging
CapitaLand Ascott Trust (SGX: HMN) is the largest lodging trust in Asia-Pacific. It manages 101 properties in 16 countries and has a portfolio valued at S$8.5 billion.
Revenue rose 11% in 1H 2024, although distribution per stapled security dipped due to higher finance costs. The trust continues to optimize its portfolio through divestment and asset enhancements, delivering 8% year-on-year gross profit growth in 3Q 2024. With a strong sponsor in CapitaLand Investment Limited, the trust remains a reliable option for income seekers.
Resilient choices in evolving times
As the global economic environment stabilizes, these four REITs—spanning healthcare, datacentres, retail, and lodging—stand out as promising options for passive income investors. They are positioned to provide stability and growth in the years ahead with strategic growth plans, strong sponsorships, and well-diversified portfolios.