Real Estate Investment Trusts (REITs) in Singapore diversify their investments across various property sectors. These include retail spaces, office buildings, industrial (including those used for logistics), data centres, and hospitality-related assets (like hotels, serviced residents, and student accommodations).

Each of the REITs specialise in one or more of these sectors, offering investors exposure to different segments of the real estate market.

In today’s discussion, I will be focusing on industrial REITs that are focused on Singapore, either in terms of their revenue contributions or asset value. You will find 6 REITs that fulfil this criteria, and you will learn about the properties they have in their portfolio, along with their latest financial performance, portfolio occupancy and debt profile, and distribution payout to unitholders:

1. AIMS APAC REIT (SGX: O5RU)

AIMS APAC REIT (AA REIT) invests in industrial, logistics, and business park properties in the Asia Pacific region.

As of 30 June 2024, its portfolio comprises 28 properties – of which, 25 are located in Singapore, with the other 3 located in Australia.

For the first quarter of FY2024/25 ended 30 June (1Q FY2024/25), gross revenue and net property income grew by 9.7% and 6.6% compared to a year ago to S$47.3m and S$34.4m respectively, which can be attributed to higher rental growth, as well as continued strong rental reversions and high tenant retention rates.

In terms of revenue contribution by geographical location in 1Q FY2024/25, 75.2% comes from its Singapore properties, while the remaining 24.8% comes from its Australia properties.

Portfolio occupancy remains stable at 97.3%, a portfolio weighted average lease expiry (WALE) at 5.2 years, and a positive rental reversion of +12.8% achieved for the quarter.

Debt profile continues to remain healthy at 33.1%, with interest coverage ratio at 4.1x, and blended debt financing cost at 4.3% (a little on the high side here in my opinion). The REIT has 74% of borrowings hedged at fixed rates.

AA REIT is one of the few REITs that pays out a distribution on a quarterly basis. For 1Q FY2024/25, a distribution payout of S$0.0227/unit was declared, a 1.7% decline compared to its payout of S$0.0231/unit a year ago. This was due to a larger unit base following the equity fund raising exercise completed in 2Q FY2023/24.

2. CapitaLand Ascendas REIT (SGX: A17U)

CapitaLand Ascendas REIT (CLAR) is Singapore’s first and largest listed business space and industrial REIT. Its investment focus is on technology and logistics properties in developed markets.

As of 30 June 2024, CLAR’s portfolio comprises 229 properties spread across Singapore, the United States, Australia, as well as in the United Kingdom/Europe. In terms of asset value, 64% (or S$10.8 billion) is derived from its Singapore properties, 14% (or S$2.3 billion) from its Australia properties, 12% (or S$2.1 billion) from its properties in the United States, and the remaining 10% (or S$1.7 billion) from its properties in the United Kingdom/Europe.

For the first half of the financial year 2024 ended 30 June (1H FY2024), CLAR reported a decent set of financial performance, with its gross revenue and net property income recording a year-on-year improvement of 7.2% and 3.9% to S$770.1 million and S$528.4 million respectively, driven by acquisitions and newly completed properties.

Total portfolio occupancy was at 93.1%, with a portfolio WALE at 3.8 years, and a positive rental reversion of +13.4% achieved for 1H FY2024.

CLAR’s debt profile remains at a healthy level at 37.8%, with its interest coverage ratio at 3.7x, and weighted all-in debt cost at 3.7%. The REIT has 83% of borrowings hedged at fixed rates.

Distribution payout to unitholders, however, dipped by 2.5% compared to last year, to S$0.07524, due to a larger unit base.

3. ESR-LOGOS REIT (SGX: J91U)

ESR-LOGOS REIT invests in logistics, industrial, as well as business park properties.

As of 30 June 2024, its portfolio comprises a total of 71 properties (excluding 48 Pandan Road held through a joint venture) – with 52 located in Singapore, 18 located in Australia, and 1 located in Japan.

For the first half of FY2024 ended 30 June (1H FY2024), ESR-LOGOS REIT’s gross revenue and net property income fell by 8.1% and 9.2% on a year-on-year basis to S$180.9 million and S$127.8 million respectively, mainly due to the loss of income from the divestment of non-core assets last year, and the decommissioning of a property in Singapore.

On a same-store basis, however, its gross revenue and net property income grew by 1.6% and 0.5% year on year, respectively.

Portfolio occupancy remained stable at 91.4%, with its portfolio WALE at 3.3 years. A positive rental reversion of +11.2% was recorded for 1H FY2024.

ESR-LOGOS REIT’s gearing ratio is at a healthy level of 36.5%. However, its interest coverage ratio at 2.5x is on the low side. At the same time, its all-in cost of debt at 4.03% is slightly higher than average (which is at around the 3+% level).

Finally, the REIT’s distribution payout to unitholders saw a 18.6% decline to S$0.01122, from S$0.01378 last year, due to lower net property income, lower distribution of capital gains from the sale of investment properties in prior years, and higher number of units mainly due to the equity fund raising exercise completed in 1H FY2023.

4. Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust (MIT) invests in industrial and data centre properties.

As of 30 June 2024, 83 of its properties are located in Singapore, 56 are in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd), and 1 in Japan.

For the first quarter of FY2024/25 ended 30 June (1Q FY2024/25), MIT reported a stable set of financial results, with its gross revenue and net property income increased by 2.7% and 1.3% compared to last year to S$175.3m and S$132.5 million respectively. This can be attributed to revenue contributions from the newly acquired data centre in Japan, along with new leases and renewals across various property clusters.

The portfolio occupancy of MIT is at 91.9%, with WALE at 4.6 years. An average positive rental reversion of +9.2% was achieved for renewal leases.

MIT’s aggregate leverage is at a healthy level of 39.1%, with interest coverage ratio at 4.7x, and average borrowing cost at 3.2%. The REIT has 82.1% of its borrowings hedged at fixed rates.

In terms of its distribution payout to unitholders, MIT was one of the 6 REITs that have increased its payout for the quarter this time round (for REITs that have declared a distribution payout for the period ended 30 June) – particularly, its distribution payout increased by 1.2% on a year on year basis to S$0.0343, due to an increase in distribution by joint venture. MIT is also one of the few REITs with a quarterly distribution payout frequency.

5. Mapletree Logistics Trust (SGX: M44U)

Mapletree Logisitcs Trust (MLT) is Singapore’s first Asia-focused logistics REIT.

As of 30 June 2024, its portfolio comprises 188 properties in the following countries (with its revenue contribution in brackets) – Singapore (27.4%), China (18.3%), Hong Kong (17.0%), Japan (11.4%), South Korea (8.2%), Australia (7.1%), Malaysia (5.5%), Vietnam (4.0%), and India (1.1%).

For the first quarter of FY2024/25 ended 30 June (1Q FY2024/25), MLT reported a weaker set of financial results – with its gross revenue and net property income inching down by 0.3% and 0.9% year on year to S$181.7 million and S$156.7 million respectively, as a result of a lower contribution from China, and a weaker Japanese Yen and Chinese Yuan.

Portfolio occupancy was at a stable level of 95.7%, with its WALE at 2.9 years. A positive rental reversion of +2.6% (including China) and +4.6% (excluding China) was achieved.

Debt profile was also at healthy levels, with its aggregate leverage at 39.6%, interest coverage ratio at 3.6x, and weighted average annualised interest rate at 2.7%. MLT has 83% of its borrowings hedged at fixed rates.

Besides AA REIT and MIT, MLT is another REIT with a quarterly distribution payout frequency. For 1Q FY2024/25, its distribution payout fell by 8.9% to S$0.02068 as a result of higher borrowing costs.

6. Sabana Industrial REIT (SGX: M1GU)

Sabana Industrial REIT invests in high-tech industrial, warehouse and logistics, chemical warehouse and logistics, as well as general industrial properties.

As of 30 June 2024, the REIT has 18 properties, all of them located in Singapore.

For the first half of FY2024 ended 30 June (1H FY2024), gross revenue declined marginally by 0.2% compared to last year to S$55.2 million, while net property income remained the same as last year, at S$27.2 million.

Sabana Industrial REIT has a portfolio occupancy rate of 78.8%, which is slightly on the low side in my opinion, with its portfolio WALE at 2.7 years. It has recorded a positive rental reversion of 16.8% for 1H FY2024.

The REIT’s debt profile remained in a healthy position – with aggregate leverage at 35.8%, and interest coverage ratio at 3.3x, as well as 80.1% of borrowings hedged at fixed rates. However, its average all-in borrowing cost is at a slightly higher level at 4.3%.

Finally, Sabana Industrial REIT’s distribution payout to unitholders tumbled by 16.8% year on year to S$0.0134/unit, as 10% of the total income available for distribution was retained for prudent capital management in view of costs incurred and to be incurred in connection with the internalisation. Distribution payout was also impacted due to an enlarged unit base on the back of the distribution reinvestment plan, as well as higher borrowing costs.

Closing Thoughts

Looking at the results of the 6 industrial REITs, only 3 of them managed to record a year-on-year improvement in their gross revenue and net property income – AA REIT, CLAR, and MIT.

Portfolio occupancy for all but ESR-LOGOS REIT and Sabana Industrial REIT are at a high level of above 90%. Most also managed to record a positive rental reversion.

In terms of aggregate leverage, all 6 of them have maintained it at a healthy level. However, some of them have a slightly higher all-in borrowing cost (with AA REIT and Sabana REIT at 4.3%, and ESR-LOGOS REIT at 4.03%).

As a result of higher financing cost, 5 out of 6 REITs saw a year-on-year decline in its distribution payout, except for MIT which bucked the trend (where its distribution payout increasing by 1.2% compared to last year).

With that, I have come to my post today on the 6 Singapore REITs with strong local portfolios. Do note that this post is purely meant for educational purposes only, and is not a buy or sell call for any of the REITs discussed. Please do your own due diligence before you make any investment decisions.

Disclaimer: At the time of writing, I am a unitholder of CapitaLand Ascendas REIT, Mapletree Industrial Trust, and Mapletree Logistics Trust.

The post 6 Industrial REITs in Singapore Boasting Strong Local Portfolios first appeared on The Singaporean Investor.