Industrial S-REITs report NPI growth, but managers are cautious on outlook
SINGAPORE real estate investment trusts (S-REITs) with exposure to the industrial sub-segment have mostly reported growth in net property income (NPI) in the quarter ended March.
The resilient operating performance comes as industrial S-REITs report stable occupancies and positive rental reversions in the most recent quarter. However, the REIT managers are more cautious on the outlook – with greater emphasis on tenant retention and cost management – given the challenging macroeconomic environment affected by global tariffs and trade uncertainty.
Of the seven S-REITs that focus on the industrial sub-sector, three reported full-year results in the latest earnings season, while the others provided updates on their first quarter performance.
1. $Mapletree Ind Tr(ME8U.SI)$
Mapletree Industrial Trust’s (MINT) distribution per unit for FY25 ended March, rose 1% to S$0.1357, on the back of higher gross revenue and NPI. The growth was driven by revenue contributions from the Osaka Data Centre and an acquisition in Tokyo, in addition to new leases and lease renewals of Singapore properties.
However, MINT’s manager said higher property operating expenses and elevated borrowing costs may continue to exert pressure on distributions. It will adopt cost-mitigating measures and focus on tenant retention to maintain a stable portfolio occupancy level.
2. $Mapletree Log Tr(M44U.SI)$
Mapletree Logistics Trust (MLT) reported stable operating performance with 96.2% occupancy and 5.1% positive rental reversions in its fourth quarter. However, NPI slipped 1.6% amid lower revenue contributions from China, absence of contributions from divested properties and a weakening of regional currencies against the Singapore dollar.
MLT’s manager expects tenants to take a cautious approach to leasing and expansion amid global trade tensions, and its top priorities include ensuring tenant retention, portfolio resilience and cost management. It estimates that around 15% of portfolio revenue comes from tenants that are engaged in export businesses.
3. $AIMS APAC Reit(O5RU.SI)$
Elsewhere, AIMS APAC Reit also reported stable portfolio occupancy and 20% positive rental reversions for FY25. DPU grew 2.6% to S$0.096 for the full year.
The manager noted that the trust’s healthy balance sheet with gearing of 28.9% provides ample headroom to fund future growth initiatives and new acquisitions.
4. $ESR REIT(9A4U.SI)$
Similarly, ESR Reit posted S$82.5 million in NPI for 1Q25, a 31.3% increase on year, mainly due to full quarter contributions from acquired properties, completion of AEIs and higher contributions from existing properties.
Distributable income (DI) increased 7% on year to S$44.2 million in 1Q25. The manager expects NPI and DI to increase in FY25, given full-year contributions from completed acquisitions and AEIs, and positive rental reversions.
5. $Sabana Reit(M1GU.SI)$
Sabana Industrial Reit reported 15.3% positive rental reversion in the first quarter, continuing on four successive years of double-digit positive rental reversion. NPI rose 22 per cent to S$16 million, led by higher gross revenue. The REIT’s manager noted that performance is expected to be challenged by disruptions in global trade and significant cost pressures from the potential imposition of US tariffs, and it remains focused on optimizing portfolio occupancy.
6. $Daiwa Hse Log Tr(DHLU.SI)$
Daiwa House Logistics Trust (DHLT) reported a 2.7% increase in NPI for its overall portfolio in SGD terms during the first quarter, mainly due to the acquisition of D Project Tan Duc 2, partially offset by weaker JPY and lower contribution from Japan.
DHLT’s manager noted that trade tariffs have resulted in economic uncertainty globally, and it is monitoring the potential impact. Less than 10% of DHLT’s Japan tenants by gross rental income are involved in exporting of goods, while the property in Vietnam is anchored on a long 20-year lease that expires in 2043.
Phillip Securities analysts noted last month that S-REITs in the industrial sub-sector may face a medium impact from higher tariffs, as manufacturing may decline, especially for tenants with cross-border activities. However, they added that reshoring or near shoring could boost local industrial demand.
The analysts remain overweight on S-REITs as the sector is relatively resilient in a downturn, given that tenants are contractually required to pay rent. They noted that the sector could start benefiting from interest rate savings in 2025 and 2026.
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