It’s been a tumultuous year for S-REITs, with the sector being plagued by high inflation rates and growing interest rates. Despite these challenges, S-REITs made a comeback and reached a record high in December 2023.
Here is a quick recap of the latest S-REIT earnings season.
Table of Contents
Diversified REIT
CapitaLand Ascendas REIT (SGX: A17U)
Financial Performance
FY2023 saw the net property income of the REIT growing 5.6% YoY and is caused by the acquisitions completed during FY2023 and FY2022. These additions to the REIT’s portfolio caused it to incur increased higher property operating expenses. Consequently, distributable income and distribution per unit fell by 1.4% and 4% respectively.
Debt Profile
Debt maturity of the REIT is well spread out, with an average debt maturity of 3.2 years and its aggregate leverage stands at 37.9%, up 0.7 percentage points from Q3 FY 2023.
As at 31 December 2023, 79.1% of the REIT’s borrowing were on fixed interest rates which provides a strong buffer against fluctuations in interest rates.
Occupancy Rate
Despite QoQ occupancy rate falling by 0.3%, CapitaLand Ascendas REIT achieved a healthy occupancy rate at 94.2%.
Weighted Average Lease Expiry
CapitaLand Ascendas REIT has a weighted average lease expiry of 3.9 years. Lease expiry is also well balanced, with more lease expiry extending beyond FY 2037.
Industrial REIT
Mapletree Logistics Trust (SGX: M44U)
Financial Performance
Mapletree Logistics Trust incurred higher property expenses in FY 2023 due to an enlarged portfolio, resulting in an increase in property tax and maintenance fees. Despite these factors, distribution income grew by 5.2% while distribution per unit rose 1.2% YoY.
Debt Profile
Mapletree Logistics Trust has a healthy debt maturity profile, with an average debt duration of 3.7 years and only 9% of total debt due in this financial year and in FY 2024/2025. Another positive thing to note is that 83% of the REIT’s total debt is hedged in fixed rates to mitigate risks from interest rate increases, and that its gearing ratio declined slightly to 38.8% from 38.9% in Q3 FY 2023.
Occupancy Rate
The REIT also reported a healthy portfolio occupancy rate of 95.9% with an exception of China which has an occupancy rate of 93.1%. Occupancy rate in Australia, Vietnam, and India however, reached an impressive 100%.
Weighted Average Lease Expiry
Mapletree Logistics Trust has a well-staggered lease expiry profile, with its WALE at 2.9 years. A significant portion of its leases are expiring in FY 2024/2025 and FY 2025/2026 which may affect rental income in the near future.
Office REIT
Keppel REIT (SGX: K71U)
Financial Performance
The latest updated from Keppel REIT unveiled that the REIT’s net property income climbed 3.7% in FY 2023, largely due to higher rentals and occupancy for the Singapore properties
However, this increase in income was offset by the increase in borrowing costs, with the cost rising 16% in FY 2023. The result of this is a lower distribution income and distribution per unit which fell 5.8% and 1% respectively.
Debt Profile
Keppel REIT saw a decline in its aggregate leverage from 39.5% in FY 2022 to 38.9% in FY 2023. At the same time, the borrowings on fixed rates decreased from 76% last year to 75% this year.
Keppel REIT’s debt maturity appears well-staggered at first glance, with 22% and 21% due for refinancing in FY 2024/2025 respectively. Additionally, the remaining borrowings are due only in FY 2026 and beyond.
Occupancy Rate and Rental Reversion
Keppel REIT achieved a positive rental reversion of 9.9% for FY 2023 and higher committed occupancy of 97.1% in FY 2023, a slight jump compared to occupancy of 95.9% in the previous quarter.
Weighted Average Lease Expiry
The REIT maintains a healthy WALE of 5.5%, with its Australia portfolio having WALE rate at a whopping 11.5%.
Specialised REIT
Keppel DC REIT (SGX: AJBU)
Financial Performance
Keppel DC REIT saw a decrease in the net property income due to increased property expenses from the uncollected rental income from the Guangdong DCs. Coupled with higher finance costs and less favourable forex hedges, FY 2023 also saw a lower distributable income and distribution per unit compared to last year.
Debt Profile
While still within the regulatory limit of 50%, Keppel DC REIT’s aggregate leverage inched up 2% from 37.2% in Q3 2023 to 37.4% in Q4 2023.
The REIT has a debt profile that’s well spread out, with a bulk of the debt only expiring in 2026 and beyond.
Occupancy Period
The Keppel DC REIT’s occupancy rate of its portfolio stands at a healthy rate of 98.3%.
A deeper look at its client base shows us that a Fortune Global 500 company accounts for 35% of the REIT’s rental income; should this client choose not to renew their lease, Keppel DC REIT is at risk of a sharp reduction in its rental income.
Weighted Average Lease Expiry
The REIT has a healthy WALE of 7.6 years, and 49.8% of its lettable area and 28.6% of its rental income are due for renewal only in 2029 which is quite some time away.
It’s worth noting that 27.5% and 22.9% of its leases by rental income expire in 2024 and 2025 respectively.
Retail REIT
Frasers Centrepoint Trust (SGX: J69U)
Financial Profile
Distributable income fell 0.2% while distribution per unit dropped from 12.22% to 12.15%, mainly attributed to higher interest expense, and partially mitigated by higher net property income and distribution from joint ventures.
Debt Profile
The REIT has seen a slight decline in aggregate leverage QoQ, falling from 39.3% to 37.2% in Q4. Additionally, the REIT has a percentage of debt hedged to a fixed rate interest remaining at 63.4% and a well-distributed debt maturity.
Occupancy Rate
Frasers Centrepoint Trust has a strong committed occupancy rate of 99%, a number that’s much higher than the rest of the REITs featured in this article.
Weight Average Lease Expiry
The REIT well-distributed lease maturity profile with a weighted average lease expiry of 2.03 years and no significant concentration risk.
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