It’s almost official.
The US Federal Reserve has hinted that interest rates could stay “higher for longer” because of the strength of the US economy.
The new President Donald Trump could also reignite inflation as he presses on with tariffs against the US’s trade partners.
Back home, the REIT sector is facing persistent headwinds as REIT managers grapple with higher costs.
These headwinds have, in turn, led to lower distributable income and reduced distributions.
Here are five Singapore REITs that are working to cushion themselves from elevated interest rates.
Keppel DC REIT is a data centre REIT with a portfolio of 25 data centres across 10 countries.
The REIT has assets under management (AUM) of around S$5 billion as of 31 December 2024.
Keppel DC REIT reported a respectable set of earnings for 2024 with gross revenue rising 10.3% year on year to S$310.3 million.
Net property income (NPI) increased by 6.3% year on year to S$260.3 million.
Distribution per unit (DPU) stood at S$0.09451, up 0.7% year on year.
The good results were attributed to strong positive rental reversions and contributions from the acquisition of a Tokyo data centre last year.
The REIT recorded a strong positive rental reversion of around 39% for 2024, which will help the REIT to achieve organic rental growth.
Keppel DC REIT also acquired two data centres in Singapore in November 2024 to help to boost its DPU.
In addition, the REIT divested Kelsterbach Data Centre for around S$70.6 million to improve the REIT’s financial flexibility for further growth.
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building.
The REIT enjoys healthy positive rental reversion of 7.7% for its retail properties for the fiscal year ended 30 September 2024.
Its Tampines 1 asset enhancement initiative (AEI) was also completed on schedule in August 2024 which helped to create more than 9,000 square feet of net lettable area that was deployed to prime retail floors.
The REIT generated a return on investment (ROI) of more than 8% from this AEI.
Meanwhile, FCT is embarking on a new AEI for Hougang Mall to elevate the retail experience and unlock value.
This AEI is targeting an ROI of around 7% and should help to rental income to grow organically.
Mapletree Pan Asia Commercial Trust, or MPACT, owns 17 commercial properties across Singapore, Hong Kong, China, Japan, and South Korea.
The AUM of the REIT stood at S$15.7 billion as of 31 December 2024.
Like FCT and Keppel DC REIT, MPACT also logged a positive rental reversion of 4.6% across its portfolio.
Its key retail asset, VivoCity, is undergoing an AEI in phases to upgrade Basement 2 and bring in new-to-mall brands.
This AEI is scheduled for completion by the end of 2025 and should generate an ROI of over 10%.
Last year, MPACT also divested Mapletree Anson which was accretive to DPU on a pro-forma basis.
Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 183 properties across eight countries with an AUM of S$13.4 billion as of 31 December 2024.
MLT is very active with capital recycling to rejuvenate and improve the portfolio.
For the first nine months of fiscal 2025 (9M FY2025), a total of 13 properties announced or completed divestments as these had older specifications and limited redevelopment potential.
All were sold at a premium to their valuations.
In addition, three acquisitions were completed in Malaysia and Vietnam that were yield-accretive with high initial NPI yields of between 5.7% and 7.5%.
MLT also has two ongoing long-term AEIs to develop 51 Benoi Road and Subang 3 and 4 to create larger gross floor area, which would help the REIT to achieve healthy organic growth.
Elsewhere, the logistics REIT also reported a positive portfolio rental reversion of 3.4% as demand stayed robust for its properties.
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.
The REIT’s AUM stood at S$26 billion as of 31 December 2024.
CICT continued to report healthy positive rental reversion of 8.8% and 11.1%, respectively, for its retail and office segments.
The sale of 21 Collyer Quay at an exit yield of 3.5% provides the REIT with more financial flexibility.
In addition, CICT also acquired a 50% stake in ION Orchard Mall for S$1.8 billion which boosted its AUM and DPU.
Two concurrent AEIs, one for the IMM Building and the other for Gallileo, are set for completion this year and should provide healthy organic rental income growth.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.