{"id":14080,"date":"2023-11-21T19:05:29","date_gmt":"2023-11-21T11:05:29","guid":{"rendered":"https:\/\/www.syfe.com\/magazine\/?p=14080"},"modified":"2024-04-02T14:30:22","modified_gmt":"2024-04-02T06:30:22","slug":"s-reit-q32023-earnings-recap","status":"publish","type":"post","link":"https:\/\/www.syfe.com\/magazine\/s-reit-q32023-earnings-recap\/","title":{"rendered":"S-REIT Q32023 Earnings Recap"},"content":{"rendered":"
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The numbers reported by Singapore REITs for the third quarter of 2023 have been a mixed bag. <\/p>\n\n\n\n

Many factors played a role here. The persisting high-interest rates that pushed up the financing cost for S-REITs by making the debt costly. The unfavourable foreign exchange rates with a stronger Singapore dollar. With higher occupancies, property expenses also increased. All of this ate into the distributable income of investors. <\/p>\n\n\n\n

However, there is a bright spot that emerged\u2014the resilience in the operational performance of S-REITS. Here is a quick recap of highlights from the Q3 2023 S-REIT earnings season.<\/p>\n\n\n

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Diversified REITs<\/strong><\/h2>\n\n\n\n

CapitaLand Integrated Commercial Trust<\/em> (SGX:CICT<\/a>)<\/strong><\/h3>\n\n\n
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CapitaLand Integrated Commercial Trust posted a 4.6% jump in gross revenues<\/a> to S$391.3 million due to higher gross rental income from existing properties. The occupancy rates for retail, office, and integrated development properties were more than 96.0%. Consequently, the property operating expenses also went up by 15.4% which caused net property income to grow marginally by 0.6% year-on-year to S$275 million. CICT did not declare any distributions for the quarter, as it happens on a half-yearly basis. <\/p>\n\n\n\n

Suntec REIT<\/em> (SGX:T82U<\/a>)<\/strong><\/h3>\n\n\n
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Suntec\u2019s gross revenue climbed<\/a> 15% to S$123.4 million and net property income rose 9.7% to S$84.6 million year-on-year, thanks to the better operating performance of its office, retail and convention properties. Despite that, investors got lesser dividends this quarter. The distributable income fell 13.3% to S$52 million<\/a> and DPU dropped 14% to S$0.01793 compared to last year due to higher financing costs and a weaker Australian dollar against the Singapore dollar. <\/p>\n\n\n\n

Industrial REITs <\/strong><\/h2>\n\n\n\n

Mapletree Logistics Trust<\/em> (SGX:M44U<\/a>)<\/strong><\/h3>\n\n\n
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Mapletree Logistics Trust\u2019s gross revenue for the quarter ended Sep\u2019 30, 2023, rose 1.5% to S$186.7 million year-on-year, while the net property income climbed 1.2% to S$162 million. Higher revenue from existing assets, along with a divestment gain of S$8.8 million, led to better distributable income for investors. The amount distributable to unitholders in the quarter increased by 4.2% to S$112.5 million<\/a> and the distribution per unit (DPU) went up by 0.9% to S$0.02268 as compared to last year. <\/p>\n\n\n\n

Retail REITs<\/strong><\/h2>\n\n\n\n

Frasers Centrepoint Trust <\/em>(SGX:FCT<\/a>)<\/strong><\/h3>\n\n\n
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In the Q3 business update, Frasers Centrepoint Trust reported a 1.1% rise in net property income to S$130 million for the six-month period from April 1, 2023, to September 30, 2023. Its gross revenue increased 1.8%<\/a> to S$184 million with better portfolio occupancy and higher rental income. <\/p>\n\n\n\n

FCT distributes earnings to its shareholders semi-annually in March and September every year. In the second half of its financial year ended 30 September 2023, its distributable income dropped 0.7% to S$103 million<\/a> and distribution per unit fell 1.2% to 6.02 Singapore cents as operating expenses rose due to higher utilities expenses, higher repair and maintenance costs, and higher staff costs.<\/p>\n\n\n\n

Office REITs<\/strong> <\/h2>\n\n\n\n

Keppel REIT<\/em> (SGX:K71U<\/a>)<\/strong><\/h3>\n\n\n
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Keppel REIT saw a healthy 5% increase in revenue to S$230.87<\/a> million in the first nine months of 2023 from the higher rental income and increased occupancy from its Japan portfolio. However, the net property income<\/a> grew just by 1% to S$179.24 million mainly due to mounting expenses such as utilities and property taxes. Distributable income from operations shrunk by 10.1% to S$199 million in the same time frame compared to last year as borrowing costs climbed up 20.3%.<\/p>\n\n\n\n

Specialised REIT <\/strong><\/h2>\n\n\n\n

Keppel DC REIT<\/em> (SGX:AJBU<\/a>)<\/strong><\/h3>\n\n\n
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Keppel DC REIT reported a 0.5% increase in gross revenue<\/a> to S$70.7 million in the third quarter of 2023 over the previous year. Net property income was also slightly higher, rising 0.8% to S$64.6 million on account of higher occupancies and rental reversions. Meanwhile, higher financing costs and a stronger Singapore dollar dented distributable income, which fell down 6.5% year-on-year to S$43.9 million. The DPU also declined by 3.6% to S$0.02492.<\/p>\n\n\n\n

Is Now the Right Time to Enter the Market with S-REITs?<\/strong><\/h2>\n\n\n\n

The performance of most S-REITs in Q3 2023 was dampened by high-interest rates, even as the revenue from the existing assets mounted. <\/p>\n\n\n\n

With the US central bank keeping the interest rates steady<\/a> while the inflation moderates, the likelihood of rate cuts next year has gone up.<\/p>\n\n\n\n

For those looking for a reliable investment alternative to outpace inflation, this might be the right time to invest in a diversified REIT portfolio such as Syfe REIT+<\/a>. In addition to delivering a consistent flow of tax-free income, S-REITs offer attractive valuations and appealing yields<\/a> with the potential for future growth.<\/p>\n\n\n\n

More on this topic:<\/strong><\/h3>\n\n\n\n