Introduction

The Singapore REIT market has witnessed dynamic shifts, with Keppel DC REIT and its peers demonstrating resilience and growth in a competitive environment. This in-depth analysis, provided by CGS International on January 24, 2025, highlights the financial performance, rental trends, ESG initiatives, and investment recommendations for Keppel DC REIT and other REITs across various sectors. Each company is examined thoroughly to provide insights into their market positioning and future growth potential.

Keppel DC REIT: Riding Strong Rental Reversion Tailwinds

Keppel DC REIT (KDCREIT) reported robust financial results for FY24, driven by strong rental reversions and strategic acquisitions. The REIT achieved a distribution per unit (DPU) of 4.902 Singapore cents in 2H24 and 9.451 Singapore cents for FY24, exceeding expectations at 53.7% and 103.7% of CGS International’s FY24 forecast, respectively.

Revenue and net property income (NPI) grew by 8.8% and 8.5% year-on-year (YoY) to S\$153.1 million and S\$127.6 million, respectively. This growth was underpinned by a remarkable portfolio rental reversion of approximately +39% for FY24, supported by renewals in Singapore and contributions from Tokyo DC1. Portfolio occupancy remained high at 97.2% as of December 2024.

Strategically, KDCREIT’s low gearing of 31.5% positions it well for inorganic growth, with management targeting acquisitions in Japan, South Korea, and developed European markets. The REIT’s cost of debt declined to 3.1% in 4Q24, with an interest coverage ratio of 5.3x. Notably, KDCREIT achieved a portfolio value uplift of 3.4% YoY on a same-store basis.

CGS International reiterates an “Add” rating for Keppel DC REIT with a target price (TP) of S\$2.48, emphasizing robust rental reversion momentum and potential catalysts such as additional data center space at SGP8 and greater tax transparency for new acquisitions.

CapitaLand Ascott Trust (CLAS): Hospitality Resilience

CapitaLand Ascott Trust (CLAS) demonstrated robust performance with a price target of S\$1.18. The REIT offers a dividend yield of approximately 7.0% for FY24F. With a market cap of US\$2.46 billion, CLAS benefits from its diverse portfolio across various hospitality assets. Its price-to-NAV ratio stands at 1.13, making it a competitive player in the hospitality REIT sector.

CGS International maintains an “Add” rating for CLAS, reflecting its strong fundamentals and consistent yield performance.

Frasers Logistics & Commercial Trust (FLT): Industrial Strength

Frasers Logistics & Commercial Trust (FLT) continues to deliver solid results, supported by its industrial and commercial property portfolio. The REIT has a target price of S\$1.35 and offers a dividend yield of 7.6% for FY25F. With a strong market cap of US\$2.45 billion and a price-to-NAV ratio of 0.78, FLT remains an attractive investment option.

The “Add” rating by CGS International reflects FLT’s potential for stable returns and growth opportunities in the industrial REIT sector.

Mapletree Industrial Trust (MINT): Technological Edge

Mapletree Industrial Trust (MINT) stands out with its focus on data centers and high-tech industrial properties. The REIT boasts a target price of S\$2.82 and a dividend yield of 6.3% for FY25F. With a market cap of US\$4.65 billion and a price-to-NAV ratio of 1.27, MINT is well-positioned to benefit from the ongoing digital transformation trends.

CGS International’s “Add” rating underscores MINT’s strong market positioning and growth prospects in the tech-driven industrial sector.

CapitaLand Integrated Commercial Trust (CICT): Retail and Commercial Synergy

CapitaLand Integrated Commercial Trust (CICT) leverages its diversified portfolio of retail and commercial properties to deliver steady returns. The REIT has a target price of S\$2.45 and offers a dividend yield of 5.9% for FY25F. With a market cap of US\$10.46 billion and a price-to-NAV ratio of 0.91, CICT is a market leader in the retail REIT space.

CGS International maintains an “Add” rating for CICT, reflecting its resilience in a challenging retail environment and its strategic focus on integrated commercial assets.

Mapletree Pan Asia Commercial Trust (MPACT): Pan-Asian Growth

Mapletree Pan Asia Commercial Trust (MPACT) continues to expand its footprint across Asia. The REIT has a target price of S\$1.53 and offers a dividend yield of 6.8% for FY25F. With a market cap of US\$4.63 billion and a price-to-NAV ratio of 0.69, MPACT is an emerging leader in the pan-Asian commercial REIT sector.

CGS International’s “Add” rating reflects MPACT’s strong growth trajectory and strategic market diversification.

Parkway Life REIT (PREIT): Healthcare Stability

Parkway Life REIT (PREIT) focuses on healthcare-related real estate, offering a stable dividend yield of 4.0% for FY25F. The REIT has a target price of S\$4.91 and a market cap of US\$1.87 billion. Its price-to-NAV ratio of 1.69 underscores its strong market positioning in the healthcare REIT space.

CGS International’s “Add” rating highlights PREIT’s resilience and consistent performance in the healthcare sector.

Conclusion

The Singapore REIT landscape continues to evolve, with companies like Keppel DC REIT and its peers demonstrating strong fundamentals and growth potential. From data centers to hospitality and retail, these REITs offer diverse investment opportunities for investors. CGS International’s detailed analysis and recommendations provide valuable insights for navigating this dynamic market.