What happened?
The Singapore REITs sector has been hit hard by elevated interest rates.
More recently, we have seen weakness in the share prices of Singapore REITs as many of them saw a decline in their dividends with higher finance costs.
Despite these headwinds, there is a small group of REITs that have triumphed over adversity.
The REIT managers have deftly managed their REIT portfolios through a mix of acquisitions, divestments, and asset enhancement initiatives (AEIs).
As a result, these REITs managed to eke out a year-on-year increase in dividends.
Here are three REITs that saw increases in their dividends this earnings season – Mapletree Industrial Trust, Keppel DC REIT and AIMS APAC REIT.
3 Singapore REITs that raised their dividends
#1 – Mapletree Industrial Trust
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and one in Japan.
MIT’s AUM stood at S$8.9 billion as of 30 September 2024 and its assets cover various industrial sub-segments such as data centres, hi-tech buildings, flatted factories, and business parks.
The REIT reported an encouraging set of earnings for its second quarter of fiscal 2025 (2Q FY2025) ending 30 September 2024.
Gross revenue increased by 4.2% year on year to S$181.4 million while NPI improved by 4.6% year on year to S$134.5 million.
DPU edged up 1.5% year on year to S$0.037, in part because of a 0.4% year-on-year increase in MIT’s number of issued units to 2.84 billion.
The better performance came about because of new leases and renewals along with maiden contributions from its new Osaka data centre.
MIT’s portfolio occupancy stayed high at 92.9%, increasing by one percentage point compared with 1Q FY2025.
The REIT also boasted a diversified tenant base of more than 2,000 tenants with the largest, HP Inc, taking up just 6% of gross rental income.
The portfolio also registered a positive rental reversion of 10.7% for renewal leases.
MIT completed the acquisition of a freehold property in Japan with redevelopment potential during the quarter.
This property should enable MIT to earn higher rental income in the future once it is redeveloped.
MIT’s aggregate leverage stood at 39.1% with a moderate cost of debt of 3.2%.
Find out how much dividends Mapletree Industrial Trust is expected to pay in the coming year based on current market forecasts.
Learn more about Mapletree Industrial Trust dividend history and dividend payment dates
#2 – Keppel DC REIT
Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres spread across 10 countries.
The REIT announced a mixed set of earnings for the third quarter of 2024 (3Q 2024).
Gross revenue rose almost 9% year on year to S$76.9 million, lifted by rent increases from positive rental reversions and organic rental escalations.
There was also a contribution from the newly acquired Tokyo DC 1.
However, property expenses more than doubled year on year to S$12.5 million because of loss allowances on its Guangdong data centres.
As a result, net property income (NPI) dipped by 0.2% year on year to S$64.5 million.
Finance income climbed 58% year on year to S$4.3 million, aided by the Australian data centre note that Keppel DC REIT took up in April that had an initial yield of 6.97%.
Because of this note, the REIT’s DPU eked out a small 0.4% year-on-year gain to S$0.02501.
Keppel DC REIT boasted a high portfolio occupancy of 97.6% as of 30 September 2024.
The REIT also enjoyed a seventh consecutive quarter of positive rental reversions, including a major contract renewal that featured a >40% positive reversion.
The data centre REIT’s aggregate leverage stood at 39.7% with an average cost of debt of 3.3% for its latest quarter.
This level of gearing provides sufficient debt headroom for Keppel DC REIT to undertake further acquisitions to boost its DPU.
From the above, it’s clear that Keppel DC REIT has managed to grow its assets under management (AUM) steadily since its IPO in 2014.
The REIT has almost tripled its number of assets while AUM has nearly quadrupled in the past decade.
Hence, investors should expect the manager’s track record to speak for itself when it comes to growth expectations.
Find out how much dividends Keppel DC REIT is expected to pay in the coming year based on current market forecasts.
Learn more about Keppel DC REIT dividend history and dividend payment dates
#3 – AIMS APAC REIT
AIMS APAC REIT, or AAREIT, is also an industrial REIT with a portfolio of 28 properties.
25 properties are located in Singapore while three are in Australia.
AAREIT announced an admirable set of earnings for the first half of fiscal 2025 (1H FY2025) ending 30 September 2024.
Gross revenue increased by 7.7% year on year to S$93.5 million while NPI jumped 5.1% year on year to S$67.6 million.
DPU crept up 0.4% year on year to S$0.0467.
Portfolio occupancy stood high at 95%, although it was down from the previous year’s 98.1%.
AAREIT saw a high tenant retention rate of 78.6% and reported a double-digit positive rental reversion of 16.9%.
Aggregate leverage was low at just 33.4% but the REIT’s blended debt funding cost came in at 4.4%.
Like MIT, AAREIT also has a diversified tenant base with 194 tenants, of which the largest tenant (Woolworths) took up 13% of gross rental income.
The manager intends to embark on a portfolio rejuvenation with a few AEIs identified.
These AEIs will cost S$32 million and be completed by 1Q FY2026.
The manager expects these two properties to generate a projected NPI yield of more than 7% post-completion.
Find out how much dividends AIMS APAC REIT is expected to pay in the coming year based on current market forecasts.
Learn more about AIMS APAC REIT dividend history and dividend payment dates
What would Beansprout do?
This trio of REITs – Keppel DC REIT, Mapletree Industrial Trust and AIMS APAC REIT managed to overcome the odds and post an increase in their dividends in the most recent quarter.
Although the increase may be small, it is a testament to each REIT’s good management and the strength of their portfolios of properties. It’s also clear that each REIT has undertaken acquisitions or AEIs to help grow its rental income.
Across the three REITs, AIMS APAC REIT is expected to offer the highest dividend yield of 7.4%. This is followed by Mapletree Industrial Trust, which has a forward dividend yield of 5.7%. Keppel DC REIT has the lowest forward dividend yield of 4.1%.
Comparing their price-to-book (P/B) valuation, only AIMS APAC REIT is trading below its book value, with a P/B valuation of 0.97x. Mapletree Industrial Trust is trading at a price-to-book valuation of 1.32x, while Keppel DC REIT is trading at a price-to-book valuation of 1.65x.
Based on its ability to grow its dividends, as well as valuation compared to the other 2 REITs, we would be adding AIMS APAC REIT to our watchlist.
Discover the best Singapore REIT for your income portfolio with our Singapore REIT Screener.
If you are interested to learn more about the outlook of Singapore REITs, join us for our upcoming free webinar on 26 November, where we will discuss what will drive the share prices of Singapore REITs in 2025. Register for free here.
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