3 Singapore REITs That Raised Their Dividends

CyberPearl IT Park, CapitaLand India Trust, CLINT

The REIT sector has had a tough time over the past two years as rising interest rates and high inflation worked against each other.

The good news is that these headwinds may be abating as the US Federal Reserve prepares to cut interest rates in light of favorable inflation data.

With this reduction in pressure, REITs should face less stress in terms of operating and financial expenses.

As a result, more REITs will be able to demonstrate higher distributable income, which will translate into higher dividends.

This earnings season, we’ve highlighted three Singapore REITs that have managed to grow their payouts despite the economic headwinds.

Mapletree Industrial Fund (SGX:ME8U)

Mapletree Industrial Trust, or MIT for short, is an industrial REIT with a portfolio of 56 properties in the U.S., 83 properties in Singapore, and one in Japan.

The REIT’s assets under management (AUM) as of June 30, 2024 was SGD 9 billion.

MIT reported stable earnings for the first quarter of fiscal year 2025 (1Q FY2025) ending June 30, 2024.

Gross revenue increased 2.7% year-on-year to S$175.3 million, driven by the acquisition of a Japanese data centre and new and renewed leases across the portfolio.

While property expenditure rose by 7.4% year-on-year, net property income (NPI) still saw a slight increase of 1.3% year-on-year to S$132.5 million.

Distribution per unit (DPU) was S$0.0343, up 1.2 per cent year-on-year.

MIT has resumed its Distribution Reinvestment Plan (DRP) for the first quarter of fiscal year 2025, allowing unitholders to choose between cash and bonds.

This decision will help MIT strengthen its balance sheet and enable it to pursue more growth initiatives.

The industrial REIT increased its portfolio’s occupancy rate to 91.9% from 91.4% in the prior quarter with a new lease at 402 Franklin Road in Brentwood.

The portfolio also recorded an average positive rental return of 9.2% on lease renewals.

Since its IPO in fiscal 2011, MIT has experienced impressive portfolio growth, with assets under management increasing from S$2.2 billion to S$8.9 billion in fiscal 2024.

As of June 30, 2024, the industrial REIT’s total leverage ratio was 39.1%, giving it ample room to leverage debt to make further acquisitions.

Since 82.1% of REIT loans are linked to fixed interest rates, investors do not have to worry about sharply increasing finance costs.

Parkway Life REIT (SGX:C2PU)

Parkway Life REIT, or PLife REIT, is a healthcare REIT with a diversified portfolio of 63 properties in Singapore (3), Japan (59) and Malaysia (1).

As of June 30, 2024, the REIT had assets under management of SGD 2.2 billion.

For the first half of 2024, gross revenue fell 2.7% year-on-year to S$72.4 million, while net revenue fell 2.5% year-on-year to S$68.4 million.

The manager attributed the decline to the Japanese yen against the Singapore dollar.

However, DPU rose 3.5% year-on-year to S$0.0754.

PLife REIT continued to enjoy a very low total cost of debt of just 1.35% on a gearing ratio of 35.3%.

The interest coverage ratio also remained high at 10.6, with 90% of loans secured by fixed interest rates.

This healthcare REIT has enjoyed continuous growth in underlying DPU since its initial public offering in 2007.

This trend looks set to continue, with approximately 98.6% of REIT leasing contracts protected against downside.

Hospitals in Singapore should also show organic growth, with a clearly defined rental structure.

In Japan, most nursing home lease agreements contain a rent review clause only for rent increases.

PLife REIT intends to deepen its collaboration with existing and new partners and aims to unlock value from optimised assets to reinvest in higher-yielding strategic assets.

CapitaLand India Mutual Fund (SGX:CY6U)

CapitaLand India Trust, or CLINT for short, is an Indian real estate investment trust with a portfolio of 10 IT business parks, one logistics park, three industrial properties and four data centres.

As of June 30, 2024, CLINT had assets under management of SGD 3.2 billion.

In H1 2024, total property income increased by 23% year-on-year to SGD136.1 million.

NPI rose 21% year-on-year to S$103.5 million, while DPU rose 8% year-on-year to S$0.0364.

A combination of higher rental income from existing properties, positive rental returns and rental income from acquisitions made in 2023 helped CLINT improve its performance and achieve higher DPU.

The engagement rate increased from 93% in H2 2023 to 96% in H1 2024.

The REIT’s gearing ratio was 38.1%, but the cost of debt was high at 6.2%.

Approximately 71% of REIT loans were fixed-rate loans, and the interest coverage ratio was 2.7.

CLINT has a long-term development strategy.

The company has projects in the pipeline in Bangalore, Hyderabad and Chennai and is also open to acquisitions by outside entities and sponsors.

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Disclosure: Royston Yang owns shares of Mapletree Industrial Trust.

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