As of 19 October 2023, four S-REITs have reported business updates for the latest quarter ending 30 September 2023. Another 26 S-REITs and Property Trusts have also confirmed the dates of their releases in the coming weeks.
Sabana Industrial REIT (Sabana REIT) was the first to kick off this earnings season for the sector. It reported total portfolio occupancy of 91.8 per cent in 3Q 2023, down 2.1 per cent from 2Q 2023. Its portfolio rental reversions, which continued to remain positive since 1Q 2021, was at 16.8 per cent in the latest quarter.
On the capital management front, Sabana REIT’s aggregate leverage grew slightly to 33.8 per cent as of 30 September 2023 as compared to 32.5 per cent as of 30 June 2023. The amount of borrowings on fixed rates was at 78.5 per cent, down from 82.2 per cent in the previous period.
Sabana REIT’s interim manager noted that since the Extraordinary General Meeting on 7 August 2023 to internalise the REIT management function, its primary focus has been on motivating staff, stabilise portfolio and executing asset enhancement initiatives.
Last week, the Keppel Group of REITs also reported business updates for the quarter ending 30 September 2023. All three REITs saw lower distributable income on the back of rising finance costs.
Keppel DC REIT (KDCREIT) saw distributable income retreat 6.5 per cent year-on-year, leading to a 3.6 per cent decline in distribution per unit (DPU). This also saw KDCREIT’s average cost of debt increase by 20 basis points (bps) to 3.5 per cent and aggregate leverage increase by 90bps to 37.2 per cent from 30 June 2023.
Keppel Pacific Oak US REIT’s 3Q 2023 distributable income was also down 10.7 per cent year-on-year to US$13.1 million due to higher financing cost as a result of rising interest rates. Its average cost of debt increased from 3.89 per cent as of 30 June 2023, to 3.95 per cent as of 30 September 2023, with aggregate leverage rising 0.70 bps to 39.1 per cent across the same period.
Keppel REIT’s 9M 2023 distributable income from operations was 10.1 per cent lower due to increased borrowing costs, and higher property tax and utility costs. Its aggregate leverage of 39.5 per cent as of 30 September 2023 is 30 bps above 30 June 2023 levels, while all-in interest rate rose slightly, by 10 bps to 2.85 per cent per annum.
Looking ahead, much focus will continue to be on the sector’s balance sheet strengths and the impact of rising finance costs.
—
Originally Posted October 23, 2023 – REIT Watch – Focus on S-REITs’ resilience against rising rates
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Singapore Exchange and is being posted with its permission. The views expressed in this material are solely those of the author and/or Singapore Exchange and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Alternative Investments
Alternative investments can be highly illiquid, are speculative and may not be suitable for all investors. Investing in Alternative investments is only intended for experienced and sophisticated investors who have a high risk tolerance. Investors should carefully review and consider potential risks before investing. Significant risks may include but are not limited to the loss of all or a portion of an investment due to leverage; lack of liquidity; volatility of returns; restrictions on transferring of interests in a fund; lower diversification; complex tax structures; reduced regulation and higher fees.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.