It has not been a good quarter for unitholders of Singapore-listed REITs this time round, where distribution payouts for most of them have been impacted to a certain extent as a result of higher borrowing cost.
For those that have properties out of Singapore, their distribution payout were also impacted by unfavourable foreign exchange against the strong Singapore Dollar.
However, there are 7 REITs that managed to buck the trend and report a higher distribution payout this time round – among the list include 4 hospitality REITs, 1 healthcare REIT, 1 commercial REIT, and 1 industrial REIT.
In this post, I will be sharing with you what they are, and also a brief highlight of its latest financial performance.
Let’s begin:
1. Far East Hospitality Trust (SGX:Q5T)
Listed on the Singapore Exchange in August 2012, Far East Hospitality Trust’s portfolio comprises of 12 properties totalling 3,015 hotel rooms and serviced residence units valued at approximately S$2.45 billion as at 31 December 2022.
The following is the hospitality trust’s key financial results for 1H FY2023, compared against the same time period last year:
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $41.0m | $52.0m | +26.9% |
| Net Property Income (S$’mil) | $37.5m | $49.0m | +30.7% |
| Distributable Payout to Unitholders (S$’mil) | $30.6m | $38.4m | +25.6% |
| Distribution Per Unit (S$’cents) | 1.54 cents | 1.92 cents | +24.7% |
The strong double-digit percentage climb in its gross revenue and net property income (by 26.9% and 30.7% respectively) can be attributed to improvements recorded by all segments of its portfolio (where average occupancy, average daily rate, as well as revenue per available unit of its hotels and serviced residences continued to climb – particularly, its revenue per available unit for its serviced residences, at S$224 in 1H FY2023, is very close to its all-time high of S$230.)
Distribution payout to unitholders spiked by 25.6% as a result of higher net property income contribution, and distribution of other gains from the divestment of Central Square.
Accordingly, its distribution per unit went up by 24.7% to 1.92 cents – the hospitality trust is among the 2 REITs that have saw its distribution payout improve by 20+% this time round (the other one is CDL Hospitality Trusts – which we will be looking at its latest results in a moment).
2. CDL Hospitality Trusts (SGX:J85)
CDL Hospitality Trusts is one of Asia’s leading hospitality trusts with assets under management of about S$3.1 billion as at 30 June 2023. Its portfolio comprises 19 operational properties (including a total of 4,820 rooms and a retail mall), and one Build-to-Rent project in the pipeline with 352 apartment units.
The following table is the hospitality trusts’ key financial results for 1H FY2023, compared against the same time period last year:
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $98.6m | $119.2m | +20.9% |
| Net Property Income (S$’mil) | $51.0m | $62.9m | +23.3% |
| Distributable Payout to Unitholders (S$’mil) | $25.2m | $31.2m | +23.8% |
| Distribution Per Unit (S$’cents) | 2.04 cents | 2.51 cents | +23.0% |
As a result of a continued strong momentum in international travel, CDL Hospitality Trusts’ gross revenue and net property income saw strong growths (by 20.9% and 23.3% respectively) – attributed to improvement in contribution in its properties in Singapore, Japan, Australia, Europe, as well as in the United Kingdom. On the whole, its average occupancy rate, average daily rate, and revenue per available unit all saw improvements compared to last year.
Accordingly, its distributable income to unitholders climbed by a similar percentage (23.8%) to S$31.2m, and distribution per unit went up by 23.0% to 2.51 cents.
3. CapitaLand Ascott Trust (SGX:HMN)
CapitaLand Ascott Trust is the largest lodging trust in Asia Pacific with an asset value of S$8.1 billion as at 30 June 2023. Its portfolio currently comprises 107 properties with more than 19,000 units in 47 cities across 15 countries in Asia Pacific, Europe, and the United States of America.
The following table is a comparison of the hospitality trust’s financial performance for the 1st half of FY2023 compared against that recorded last year (i.e., 1st half of FY2022):
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $267.4m | $346.9m | +29.7% |
| Net Property Income (S$’mil) | $118.2m | $154.4m | +30.6% |
| Distributable Payout to Unitholders (S$’mil) | $76.7m | $96.3m | +25.6% |
| Distribution Per Unit (S$’cents) | 2.33 cents | 2.78 cents | +19.3% |
The strong performance in its gross revenue and net property income (which grew by 29.7% and 30.6% respectively) can be attributed to 15 assets acquired in FY2022, and also in the 2nd quarter of FY2023, which were largely longer-stay assets, as well as stronger performance in its existing properties. Without the contribution of these assets, its gross revenue and net property income would have been up by 26% and 25% respectively.
CapitaLand Ascott Trust’s revenue per available unit increased by 44% to S$138. In the 2nd quarter, the revenue per available unit of properties in key markets including Australia, Japan, Singapore, United Kingdom, and United States of America performed above pre-Covid levels, while its properties in China and Vietnam were at 78% and 83% of Q2 FY2019 levels respectively.
Finally, the hospitality trust’s distributable income to unitholders rose 25.6% to $96.3m, with distribution per unit up by 19.3% to 2.78 cents as a result of a higher net property income.
4. ARA US Hospitality Trust (SGX:XZL)
Listed on the Singapore Exchange in May 2019, ARA US Hospitality Trust invests in income-producing real estate assets used primarily for hospitality purposes located in the United States. Currently, its portfolio comprises 37 select-service hotels with a total of 4,826 rooms across 19 states in the United States.
The following is a comparison of the hospitality trust’s financial results recorded for 1H FY2023 compared against the same time period last year (i.e., 1H FY2022):
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (US$’mil) | US$81.3m | US$86.0m | +5.9% |
| Net Property Income (US$’mil) | US$21.1m | US$22.0m | +4.3% |
| Distributable Payout to Unitholders (US$’mil) | US$8.1m | US$8.7m | +6.8% |
| Distribution Per Unit (US$’cents) | 1.427 US cents | 1.501 US cents | +5.2% |
Compared to the improvements made by the other 3 hospitality trusts (in Far East Hospitality Trust, CDL Hospitality Trusts, and CapitaLand Ascott Trust), it pales in comparison – as its gross revenue and net property income only saw a mid single-digit percentage improvement (by 5.9% and 4.3% respectively), which can be attributed to an improvement in its portfolio average occupancy (by 6.2 percentage points from 62.7% to 68.9%), and in its revenue per available unit (by US$15 from US$80 to US$95).
On the back of a stronger operating performance, its distributable income to unitholders, as well as its distribution per unit, went up by 6.8% and 5.2% respectively.
5. Parkway Life REIT (SGX:C2PU)
Parkway Life REIT is one of the 2 healthcare REITs listed on the Singapore Exchange (the other one being First REIT). The REIT invests in income-producing private hospital assets in Singapore (3 in total), nursing homes in Japan (57 in total), as well as medical centre in Malaysia (1 in total), valued at S$2.20b as at 31 December 2022.
The following table highlights the healthcare REIT’s results for the 1st half of FY2023, compared to that reported in the 1st half of FY2022:
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $60.2m | $74.4m | +23.6% |
| Net Property Income (S$’mil) | $56.0m | $70.1m | +25.1% |
| Distributable Payout to Unitholders (S$’mil) | $42.7m | $44.1m | +3.3% |
| Distribution Per Unit (S$’cents) | 7.06 cents | 7.29 cents | +3.3% |
Gross revenue and net property income climbed by 20+%, contributed by 5 nursing homes in Japan acquired in September 2022, and higher rent from its Singapore properties, partly offset by the depreciation of the Japanese Yen.
However, distributable income to unitholders, and its distribution per unit only improved by 3.3% due to an increase in finance costs mainly for funding of capital expenditure and new acquisitions in 2022, and higher interest costs from Singapore dollar debts partially offset by the depreciation in Japanese Yen.
6. CapitaLand Integrated Commercial Trust (SGX:C38U)
Previously known as CapitaLand Mall Trust, where it invests solely in retail properies in Singapore when it was listed back in July 2002, it was renamed to CapitaLand Integrated Commercial Trust when it merged with another CapitaLand REIT in CapitaLand Commercial Trust (which invests in office properties) in November 2020.
Currently, its portfolio comprises 21 properties in Singapore, 2 in Germany, and 3 in Australia, valued at S$24.2b.
The following table is the REIT’s financial results for the 1st half of FY2023, compared against that reported in the same time period last year (i.e., 1st half of FY2022):
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $687.6m | $774.8m | +12.7% |
| Net Property Income (S$’mil) | $501.6m | $552.3m | +10.1% |
| Distributable Payout to Unitholders (S$’mil) | $355.1m | $361.7m | +1.9% |
| Distribution Per Unit (S$’cents) | 5.22 cents | 5.30 cents | +1.5% |
The 12.7% and 10.1% improvement in its gross revenue and net property income respectively can be attributed to full contribution from the enlarged portfolio following the acquisitions of 66 Goulburn Street, 100 Arthur Street, 50.0% interest in 101-103 Miller Street and Greenwood Plaza in Sydney, Australia, and CapitaSky in 1H FY2022, together with higher occupancy and rental rates achieved and higher rental on gross turnover.
However, distributable income to unitholders only went up by 1.9% to $361.7m, due to higher finance costs from the additional borrowings for its acquisitions and increases in interest rates, with its distribution per unit inching up by just 1.5% to 5.30 cents/unit.
7. Sabana Industrial REIT (SGX:M1GU)
Sabana Industrial REIT invests in income-producing assets in the high-tech industrial, warehouse and logistics, chemical warehouse and logistics, as well as in general industry sectors. As at 31 December 2022, its portfolio comprises 18 properties in Singapore, valued at S$0.9 billion.
In the following table, you will find the REIT’s financial performance for 1H FY2023 compared against the same time period last year (i.e., 1H FY2022):
| 1H FY2022 | 1H FY2023 | % Variance | |
| Gross Revenue (S$’mil) | $44.9m | $55.3m | +23.2% |
| Net Property Income (S$’mil) | $27.0m | $27.2m | +0.5% |
| Distributable Payout to Unitholders (S$’mil) | $17.1m | $17.8m | +3.9% |
| Distribution Per Unit (S$’cents) | 1.59 cents | 1.61 cents | +1.3% |
While its gross revenue soared by 23.2%, mainly driven by higher portfolio occupancy rate, but as a result of a huge 57.7% jump in property operating expenses (from S$17.8m in 1H FY2022 to S$28.1m in 1H FY2023) including higher utility costs, its net property income only inched up by 0.5% to S$27.2m.
Accordingly, its distribution per unit edged up slightly from 1.59 cents in 1H FY2022 to 1.61 cents in 1H FY2023.
Finally, one thing to note about the REIT in case you are not already aware is that its unitholders have voted in favour of switching its existing external manager with an internal one during an extraordinary general meeting (EGM) conducted last Monday (07 August 2023). In the near-term, the uncertainty over the future of the REIT could see its unit price movement continue to remain weak.
Closing Thoughts
Hospitality REITs were the worst hit as a result of the lockdowns (both within the countries, as well as the international borders) back in 2020, but following the gradual removal of the safe management measures, revenge traveling and resumption of MICE (Meetings, Incentives, Conventions, and Exhibition) events have led to their financial performances recording improvements, and hence an improvement in its distribution payout to unitholders. In fact, out of the 7 REITs that recorded improvements in its distribution payout to unitholders, 4 of them are hospitality REITs – you can say that they are the ‘star performers’ this time round!
Looking at the 2nd half of FY2023 ahead, barring unforeseen circumstances (such as the global economy sinking into a recession), my opinion is that revenue traveling and MICE events should continue to contribute positively towards the hospitality REITs financial performances in the 2nd half of FY2023, and its distribution payout to unitholders should continue to record an improvement compared to last year.
At the other end, while Sabana Industrial REIT have seen an improvement in its distribution payout to unitholders (albeit just slightly), but uncertainty about its management, and also as to whether the move (to change from external management to an internal one) will indeed result in cost savings, and translating into a further increase in distribution payouts to unitholders, will see the REIT’s unit price movements remaining weak in the near- to even in the mid-term – it’s something to be mindful of.
With that, I have come to the end of today’s post, where I shared about the 7 Singapore-listed REITs that have continued to record an improvement in its distribution payout to unitholders. I hope you have found the information presented above useful, and as always, do note that everything you have just read above is purely for educational purposes only. You should always do your own due diligence before making any investment decisions.
Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust.
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