Keppel DC REIT: A Solid Turnaround Story

Keppel DC REIT (KDCREIT) has shown remarkable performance, positioning itself as a strong proxy for the growing demand for data center space. The REIT benefits from increasing digitalization and cloud adoption trends. Its diversified tenant base consists of internet enterprises, IT service providers, telecommunications companies, and financial services firms. As of 31 December 2024, KDCREIT boasts one of the longest weighted average lease-to-expiry (WALE) profiles in the S-REITs sector, with 6.3 years by lettable area and 4.6 years by rental income.

Key Highlights

• 2H24 and FY24 DPU Growth: Distribution per unit (DPU) surged 13.2% YoY in 2H24 to 4.902 Singapore cents and 0.7% YoY for FY24 to 9.451 Singapore cents, beating expectations.
• Portfolio Rental Reversions: A robust 39% increase in FY24, driven largely by renewals in Singapore.
• Debt Position: With minimal debt maturities in FY25, KDCREIT faces lower refinancing risks compared to peers.

Challenges and Opportunities

While concerns persist over rental arrears and sluggish recovery at its Guangdong data centers, KDCREIT’s recent acquisition of two AI-ready hyperscale data centers in Singapore strengthens its portfolio and reduces its exposure to the Chinese market. The REIT is forecasting DPU growth of 4.4% in FY25 and 16.1% in FY26, supported by robust rental reversions and portfolio valuation gains. The fair value estimate is slightly adjusted to SGD 2.43.

ESG Commitment

KDCREIT has made commendable strides in ESG, with an upgraded rating in November 2022. Its initiatives include halving Scope 1 and 2 emissions by 2030 and introducing renewable energy to at least 50% of its colocation assets by that year. A signatory of the Climate Neutral Data Centre Pact, KDCREIT underscores its commitment to sustainability.

CapitaLand Ascendas REIT: Strong Dividend Yield

CapitaLand Ascendas REIT (CAPD.SI) stands out with its attractive dividend yield forecast of 5.8% and 6.0% for FY25 and FY26, respectively. The REIT’s price-to-book (P/B) ratio is 1.1 for FY25, which underscores its valuation attractiveness compared to peers.

Performance Metrics

• Price-to-Earnings (P/E): Projected to be 18.2 in FY25 and 16.9 in FY26, indicating an improvement in profitability.
• Return on Equity (ROE): Forecast to rise from 6.3% in FY25 to 6.5% in FY26.

Outlook

CapitaLand Ascendas REIT continues to offer a strong dividend yield, coupled with steady growth in its returns. Investors may find this REIT appealing for consistent income generation.

Frasers Logistics & Commercial Trust: High Dividend Yields

Frasers Logistics & Commercial Trust (FRAE.SI) delivers one of the highest dividend yields among its peers, with 7.7% forecasted for both FY25 and FY26. The REIT operates with a P/E ratio of 15.9 for FY25 and 15.6 for FY26.

Key Metrics

• P/B Ratio: Relatively low at 0.8 for both FY25 and FY26, indicating value for investors.
• ROE: Projected to increase from 4.6% in FY25 to 4.9% in FY26.

Investment Thesis

The REIT’s focus on logistics and commercial assets positions it well in growing markets, making it an attractive option for yield-focused investors.

Mapletree Industrial Trust: Stable Growth

Mapletree Industrial Trust (MAPI.SI) maintains a balanced approach with consistent performance metrics. Its dividend yield is expected to grow slightly from 6.1% in FY25 to 6.2% in FY26, supported by stable operations across its industrial and data center portfolios.

Performance Highlights

• P/E Ratio: Predicted to hold steady at 16.2 for both FY25 and FY26.
• ROE: Anticipated to rise marginally from 7.4% in FY25 to 7.6% in FY26.

Outlook

With a P/B ratio of 1.2 and steady dividend growth, Mapletree Industrial Trust remains a dependable choice for investors seeking stability and moderate returns.

Mapletree Logistics Trust: Consistent Performer

Mapletree Logistics Trust (MAPL.SI) focuses on logistics properties across Asia-Pacific and continues to deliver consistent returns. Its dividend yield for FY25 and FY26 is forecasted at 6.4% and 6.3%, respectively, reflecting its stable cash flow generation.

Key Metrics

• P/E Ratio: Expected to improve from 20.9 in FY25 to 19.2 in FY26.
• ROE: Projected to increase slightly from 4.7% in FY25 to 4.8% in FY26.

Investment Thesis

Mapletree Logistics Trust offers reliable income and growth potential, making it a solid investment for those seeking exposure to the logistics sector.