It’s no secret that the REIT sector had a tough year in 2023.
High inflation and soaring interest rates have hit the asset class hard as investors worry about falling dividends.
Despite the challenges, acquisitions and divestitures are business as usual for some REIT managers.
These activities should help REITs cushion some of the headwinds until interest rates eventually fall.
Here are four REITs and business trusts that are interesting to consider for your purchase watchlist.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust (MLT) is a logistics REIT with a portfolio of 189 properties across eight countries and assets under management (AUM) of S$13.3 billion as at 30 September 2023.
MLT announced that it has acquired a state-of-the-art Grade A warehouse in Farrukhnagar, Delhi, India for approximately S$14.5 million.
The property is a single-storey logistics facility with 38 years remaining on its lease and is fully leased to one of India’s largest third-party logistics (3PL) companies.
This acquisition will help deepen MLT’s presence in India. India’s GDP growth has rebounded post-pandemic, supported by a growing middle-class population.
This asset is also located within an established warehouse hub with excellent connectivity and was newly completed in 2022.
The 3PL tenant has approximately eight years remaining on its lease and the purchase will result in an accretive distribution per unit (DPU).
MLT will utilize debt financing for this acquisition, which is expected to be completed by the fourth quarter of fiscal 2024.
Once completed, the logistics REIT will have total leverage of approximately 38.9%.
CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust (CLINT) is an Indian real estate trust with a portfolio of nine IT business parks, one logistics park, one industrial facility and four data centers in India.
The REIT’s total assets under management were S$2.7 billion as of September 30, 2023.
The industrial REIT recently announced the completion of its acquisition of Casa Grande Phase 2.
The acquisition consists of two fully leased industrial facilities, one for a leading electronics manufacturer and the other for a global energy solutions provider.
The acquisition consideration is approximately S$28.7 million and is the second forward transaction that CLINT has entered into with Casa Grande Group.
This acquisition increases CLINT’s completed floor space of industrial and logistics assets, which now account for nearly 10% of the portfolio.
The industrial REIT’s completed portfolio floor space will increase to 19.6 million square feet.
Following the acquisition, CLINT’s portfolio in Chennai, India will consist of two business parks, three industrial facilities, and an under-development data center to be completed by 2025.
CapitaLand Ascot Trust (SGX: HMN)
CapitaLand Ascott Trust (CLAS) is Asia’s largest hospitality trust with AUM of S$8.1 billion as at 30 September 2023.
Its portfolio consists of 103 properties with more than 18,000 units in 44 cities in 15 countries.
CLAS has announced the sale of three hotels in Osaka, Japan to an unrelated third party for a total consideration of approximately S$99.8 million.
These three properties will be sold at a premium of 15% over their combined book value, and the sale is expected to be completed by the first quarter of 2024 (Q1 2024).
Net profit is estimated to be approximately S$36.4 million and CLAS expects to recognize a net profit of approximately S$10.1 million.
CEO Selina Teo believes the sale will help unlock real estate value and reallocate capital to higher-yielding assets.
Following the sale, CLAS will have a portfolio of 30 properties in Japan, including serviced residences, hotels, rental housing, and student accommodation.
Mr Teo reiterated that Japan continues to be an attractive market for CLAS as the tourism sector receives a huge boost from domestic and international tourists.
Keppel Infrastructure Trust (SGX: AR7U)
Keppel Infrastructure Trust (KIT) is a diversified business trust with total assets of approximately S$7.3 billion in 2022.
The trust will acquire a 45% stake in Enpal BV’s solar power portfolio through a special purpose vehicle for a total of €109 million.
Enpal is Germany’s first green technology unicorn and one of Europe’s largest residential solar power installers.
The acquired portfolio consists of more than 60,000 solar power systems across Germany, with a total expected power generation capacity of 585 MW.
The first closing of 53,500 systems is expected to be completed by the end of 2023, with the remaining 65,00 systems to be acquired in three phases by the end of June 2024.
The acquisition will increase DPU by 2% to S$0.0389 in 2022 and increase gearing by 1.7 points from 39.8% to 41.5%.
If you’re a REIT investor looking to protect and grow your dividend income in 2024, we’ll show you how in an upcoming webinar. We explore his potential recovery in the REIT sector and what it means for maximizing dividend yield. Join the webinar for free here.
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Disclosure: Royston Yang owns no shares in any of the companies mentioned.