Worried About Higher for Longer Interest Rates? 3 Singapore REITs That Can Give You Peace of Mind

Royston Yang
·5-min read
Keppel DC REIT
Keppel DC REIT

It’s no secret that the surge in interest rates over the past two years has dented sentiment for the REIT sector.

Higher finance costs have eaten into REIT’s distributable income, causing many to report lower year-on-year distributions.

Although the US Federal Reserve has cut interest rates by 0.75 percentage points this year, the central bank may allow rates to stay higher for longer depending on the inflation outlook for 2025.

REIT investors are rightfully worried about the impact of elevated interest rates on the REITs they own.

Here are three solid Singapore REITs with attributes that should provide you with peace of mind as you navigate an uncertain macroeconomic landscape.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 26 properties worth S$24.5 billion as of 31 December 2023.

ADVERTISEMENT

These properties are spread out across Singapore (21), Germany (2), and Australia (3).

CICT is anchored by a strong sponsor in CapitaLand Investment Limited (SGX: 9CI), a real estate manager with S$134 billion of assets under management (AUM) and S$100 billion of funds under management as of 31 March 2024.

The REIT has demonstrated remarkable resilience in the face of inflation and interest rate headwinds.

For the first half of 2024 (1H 2024), CICT saw its gross revenue rise 2.2% year on year to S$792 million.

Net property income (NPI) jumped 5.4% year on year to S$582.4 million.

Distribution per unit (DPU) edged up 2.5% year on year to S$0.0543.

This momentum has carried on as reported in CICT’s third quarter of 2024’s (3Q 2024) business update.

Revenue inched up 1.7% year on year to S$397.9 million with NPI improving by 5.4% year on year to S$289.8 million.

ADVERTISEMENT

CICT also reported enviable operating metrics – portfolio committed occupancy stood at 96.4% as of 30 September 2024 while both its retail and office portfolios saw positive rental reversions of 9.2% and 11.7%, respectively, for the first nine months of 2024 (9M 2024).

The REIT manager is also active in acquisitions and asset enhancement initiatives (AEIs).

CICT recently announced the acquisition of a 50% stake in ION Orchard Mall along with two AEIs – one for the IMM Building in Singapore and the other for the Gallileo building in Germany.

Keppel DC REIT (SGX: AJBU)

Keppel DC REIT is a data centre REIT with a portfolio of 23 data centres across 10 countries.

Its AUM stood at S$3.9 billion as of 30 September 2024.

The data centre REIT also boasts a strong sponsor in blue-chip asset manager Keppel Ltd (SGX: BN4).

ADVERTISEMENT

Keppel DC REIT also turned in a commendable performance for 3Q 2024.

Gross revenue grew 8.9% year on year to S$76.9 million but NPI slipped by 0.2% year on year to S$64.5 million because of higher expenses and a loss allowance on the REIT’s Guangdong data centres.

DPU for the quarter managed to eke out a 0.4% year-on-year increase to S$0.02501.

Portfolio occupancy also came in very high at 97.6% and the REIT saw its seventh consecutive quarter of positive rental reversion, including a >40% reversion for a major contract renewal in Singapore.

Keppel DC REIT recently announced the acquisition of two data centres from its sponsor for S$1.4 billion in a transaction that should lift its 1H 2024 DPU by 8.1% to S$0.0492.

The data centre sector continues to enjoy significant growth globally, with higher demand coming from generative artificial intelligence and cloud service providers.

Frasers Centrepoint Trust (SGX: J69U)

Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban malls and an office building.

ADVERTISEMENT

The REIT’s AUM was approximately S$7.1 billion as of 30 September 2024.

FCT’s sponsor is real estate giant Frasers Property Limited (SGX: TQ5), which has total assets of around S$40.1 billion as of 31 March 2024.

The REIT reported a resilient set of earnings for its fiscal 2024 (FY2024) ending 30 September 2024.

Gross revenue and NPI were lower by 4.9% and 4.6% year on year, respectively, because of the divestment of Changi City Point along with the AEI conducted for Tampines 1 Mall.

Excluding these effects, revenue and NPI for FY2024 would have grown by 3.5% and 3.4%, respectively.

DPU slipped by just 0.9% year on year to S$0.12042.

FCT reported strong operating metrics that demonstrate the defensiveness of its portfolio.

Retail portfolio committed occupancy stood at 99.7% and the REIT saw a positive rental reversion of 7.7% for FY2024.

The recently completed AEI for Tampines 1 Mall saw full committed occupancy with more than 9,000 square feet of net lettable area created and deployed to prime retail floors.

The return on investment (ROI) for this AEI exceeded 8% and outperformed its target.

FCT will commence a new AEI of Hougang Mall in 2Q 2025 and will spend around S$51 million to expand the mall’s net lettable area.

The manager is targeting a 7% ROI and the AEI should be completed by 3Q 2026.

Attention Dividend Investors: Now’s the time to tap into high-yield REITs in Singapore. We’ve just released our latest report, revealing the full details on five Singapore REITs, each boasting distribution yields of 5.5% or higher.  With a focus on stability and performance, these REITs could be the missing piece in your dividend-focused portfolio. Download the FREE report now to unlock these high-yield treasures.

Follow us on Facebook and Telegram for the latest investing news and analyses!

Disclosure: Royston Yang owns shares of Keppel DC REIT.

The post Worried About Higher for Longer Interest Rates? 3 Singapore REITs That Can Give You Peace of Mind appeared first on The Smart Investor.

Latest stories

  • 5 ‘Forever Assets’ To Hold To Make Money in Your Sleep — Something Buffett Says Is a Must

    Billionaire super-investor Warren Buffett has shared plenty of financial wisdom over his almost 70-year career. When addressing the subject of retirement planning, he famously said, "If you don't find...

  • 5 Reliable Singapore REITs with Dividend Yields of 5.6% and Higher

    We highlight five dependable Singapore REITs sporting good dividends yields of 5.6% or more. The post 5 Reliable Singapore REITs with Dividend Yields of 5.6% and Higher appeared first on The Smart Investor.

  • These 4 Singapore Blue-Chip Stocks Had a Tepid 2024: Can Their Share Prices Rebound?

    These four stocks were beaten down last year but could they witness a rebound in 2025? The post These 4 Singapore Blue-Chip Stocks Had a Tepid 2024: Can Their Share Prices Rebound? appeared first on The Smart Investor.

  • A couple spent $840,000 moving into a retirement home — then it went bankrupt, report says. Here's why they're not alone

    Continuing care retirement communities can charge steep entrance fees, but are supposed to provide lifelong care. That becomes a problem if the facility goes bankrupt.

  • Here's Why We Think Singapore Exchange (SGX:S68) Might Deserve Your Attention Today

    The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even...

  • Jim Cramer Reveals the Next Best Time to Buy NVIDIA (NVDA) Stock

    We recently published a list of Jim Cramer’s Latest Lightning Round: Top 10 Stocks. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other top stocks from Jim Cramer’s Latest Lightning Round. Jim Cramer in a recent program on CNBC recommended investors to avoid worrying when others […]

  • Here’s Why SoundHound AI, Inc. (SOUN) Is Skyrocketing

    We recently compiled a list of the Why These 24 Stocks Are Skyrocketing. In this article, we are going to take a look at where SoundHound AI, Inc. (NASDAQ:SOUN) stands against the other stocks. One of the strongest stock market anomalies is the momentum effect, which is the tendency of recent past winners to outperform the […]

  • Mark Zuckerberg Backs Nvidia CEO Jensen Huang's View On Quantum Computing: 'It's Still Quite A Ways Off'

    Meta Platforms Inc. (NASDAQ:META) CEO Mark Zuckerberg agreed with Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang‘s cautious outlook on quantum computing, saying that the technology remains years away from practical implementation. What Happened: Speaking on Joe Rogan’s podcast Saturday, Zuckerberg acknowledged his limited expertise but supported the industry consensus of a decade-long timeline for widespread quantum computing adoption. “I’m not really an expert on quantum computing, but my understa

  • Nvidia Shares Dip on U.S. AI Export Restrictions and HSBC Price Target Cut

    Nvidia Faces Market Correction as Export Limits Tighten

  • Country Garden overdue results set to show steep losses amid sector's sales slump

    Country Garden, once China's top developer and now facing a liquidation lawsuit, is expected to report steep losses when it publishes long-overdue results on Tuesday, analysts say, as a prolonged property sector crisis weighed on sales. Country Garden delayed the publication of its 2023 full-year and 2024 interim financial reports after defaulting on $11 billion of offshore bonds in late 2023. As a result, its Hong Kong shares have been halted from trading since April 2, 2024.

  • At S$1.01, Is UMS Integration Limited (SGX:558) Worth Looking At Closely?

    While UMS Integration Limited ( SGX:558 ) might not have the largest market cap around , it saw significant share price...

  • 3 Prominent Dividend Stocks To Boost Your Portfolio

    As global markets navigate a choppy start to the year, with U.S. equities experiencing declines amid inflation concerns and political uncertainty, investors are increasingly seeking stability through dividend stocks. In this environment, selecting stocks that offer consistent dividends can be an effective strategy to bolster portfolios against market volatility while providing a steady income stream.

  • Moderna's Stock Crashes 22%--Pandemic Hero Now Fighting for Survival

    Revenue forecasts slashed, vaccine sales dive, and Wall Street loses patience--can Moderna bounce back?

  • China flags more policy measures to bolster yuan

    SHANGHAI/HONG KONG (Reuters) -China announced more tools to support its weak currency on Monday, unveiling plans to park more dollars in Hong Kong to bolster the yuan and to improve capital flows by allowing companies to borrow more overseas. A dominant dollar, sliding Chinese bond yields and the threat of higher trade barriers when Donald Trump begins his U.S. presidency next week have left the yuan wallowing around 16-month lows, spurring the central bank into action. The People's Bank of China (PBOC) has tried other means to arrest the sliding yuan since late last year, including warnings against speculative moves and efforts to shore up yields.

  • Up 830% in Two Years, Could a Palantir Stock Split Be Next?

    Palantir Eyes Stock Split Amid Explosive AI-Driven Growth

  • Nine once-hot economic metrics that have cooled off

    To be clear, this is not to say we’re on the precipice of a recession. Rather, it’s just acknowledgement and recognition that it has gotten harder to argue that growth is destiny.

  • Stock market today: Gains for oil producers and drops for Big Tech leave Wall Street mixed

    U.S. stock indexes were split on Monday as gains for oil-and-gas producers helped offset drops for Nvidia and other Big Tech companies. The Dow Jones Industrial Average climbed 358 points, or 0.9%, while the weakness for Big Tech stocks dragged the Nasdaq composite to a loss of 0.4%. Stocks have been under pressure the last month, and the S&P 500 is coming off its fourth losing week in the last five as traders cull expectations for how much relief the Federal Reserve may deliver this year through lower interest rates.

  • Rupee hits record low; state-run, foreign banks' dollar sales cap fall

    The Indian rupee weakened to its all-time low on Tuesday due to strong dollar bids spurred by the maturity of positions in the non-deliverable forwards (NDF) market, while likely intervention by the Reserve Bank of India helped cap losses, traders said. The rupee hit a record low of 86.6475 before closing at 86.63 against the U.S. dollar, down from its close at 86.5750 in the previous session. State-run banks were spotted offering dollars, most likely on behalf of the RBI, while foreign banks' dollar offers also helped limit the rupee's decline, traders said.

  • SingPost's ex-CEO Vincent Phang resigns from board

    The former group chief executive, alongside two other sacked executives Vincent Yik and Li Yu, have said they will contest the sacking.

  • EMERGING MARKETS-Rupiah and ringgit fall, equities slip on strong US jobs report

    * Rupiah, ringgit linger near three-week lows * Bank Indonesia officials enter FX market * MSCI EM Asia equities index at five-month low * BofA economist predicts end of Fed cutting cycle By Sameer Manekar Jan 13 (Reuters) - The Indonesian rupiah and Malaysian ringgit weakened towards three-week lows on Monday while equities in emerging Asian economies fell to their lowest since August, after a robust U.S. employment report intensified fears of prolonged high interest rates. An MSCI index of emerging market currencies fell marginally and was last circling its late-July levels.