Brief Summary
The speaker discusses recent REIT market trends, highlighting an initial rally driven by anticipation of US interest rate cuts followed by a pullback after the cuts occurred. He shares his recent REIT portfolio additions, focusing on Capital Ascot Trust, NT Data Center REIT, and Digital Core REIT, as well as two REITs he's monitoring: Capital Land Integrated Commercial Trust and Keell Pacific Oak US REIT. His investment strategy involves identifying mispriced assets with solid fundamentals and positioning for future benefits from easing interest rates.
- Capital Ascot Trust, NT Data Center REIT, and Digital Core REIT were added to the portfolio.
- Capital Land Integrated Commercial Trust and Keell Pacific Oak US REIT are being monitored.
- The investment strategy focuses on mispriced assets and potential benefits from easing interest rates.
Capital Ascot Trust: A Blue Chip That's Lagging
The speaker added Capital Ascot Trust (Clauss) to his portfolio, noting that it has underperformed compared to other blue-chip REITs despite steady financial performance. In the first half of 2025, Clauss saw a 3% year-on-year increase in revenue per available unit, reaching 150 Singapore dollars, and a gross profit increase of about 6%. The core distribution per unit (DPU) was 2.4040 cents, with a total DPU of 2.53 cents, remaining relatively flat compared to the previous year. With a yield of around 6.5% and gearing at 39.6%, Clauss presents an attractive opportunity, especially with potential for cheaper refinancing as rates decrease. The speaker believes Clauss has room to catch up as the REIT market recovers, offering both value and income.
NT Data Center REIT: An Overlooked Story
The speaker highlights NT Data Center REIT as an underappreciated investment opportunity. Backed by Japan's NT Group, this REIT focuses on data center assets essential for cloud, AI, and digital services. At its IPO, the REIT projected yields of 7.0% to 7.5% for FY2526, rising to 7.8% for FY2627, with occupancy expected to increase to 97.6% from 94% and annual revenue growth projected at 5%. Despite a healthy leverage of around 35% and an all-in debt cost of 3.9% to 4.0%, the unit price initially fell before rebounding. The speaker believes the REIT's fundamentals are strong, driven by the long-term growth of data centers, and sees the initial lukewarm sentiment as a buying opportunity.
Digital Core REIT: A Mix of Both Stories
Digital Core REIT was added to the speaker's portfolio due to its combination of characteristics seen in Clauss and NT Data Center REIT. As a pure-play data center REIT sponsored by Digital Realty, it holds freehold assets across key US and Canadian markets, leased to major tech and cloud companies. In the first half of 2025, gross revenue surged 84% year-on-year, and net property income rose 52% to $46.3 million, supported by acquisitions and stronger occupancy, which improved to 98%. Despite these improvements, the DPU remained flat at 1.80 US cents. With a yield of about 6.8% to 7% and gearing at 38.3%, the speaker views Digital Core as both underappreciated and well-positioned for future recovery, especially with potential for reduced borrowing costs through refinancing as US interest rates ease.
Eyeing Capital Land Integrated Commercial Trust: The Flagship REIT
The speaker is closely monitoring Capital Land Integrated Commercial Trust (CICT), Singapore's largest REIT with over 24 billion Singapore dollars in assets, including iconic malls and offices. In the first half of FY2025, DPU rose 3.5% year-on-year to 5.6262 cents, annualizing to a yield of around 5%. Distributable income grew 12% year-on-year, driven by the Ion Orchard acquisition and lower interest expenses. With a healthy portfolio occupancy of 96.3% and strong rent reversions, CICT is seen as a flagship REIT that could lead the sector's recovery. Although the speaker missed an earlier entry point, he remains positive and is waiting for the right opportunity to invest in this steady distribution provider.
Eyeing Keell Pacific Oak US REIT: Tactical Re-Entry
Keell Pacific Oak US REIT (KORE) is being considered for a tactical re-entry. This US-focused office REIT owns freehold properties in tech-driven cities and focuses on business parks and suburban offices. The speaker previously bought KORE, sold part of his position at 25 cents during a rally, and is now looking to buy back some of what he sold after the price fell back to around 22 cents. He believes further US rate cuts could support another price increase, making it an interesting risk-reward opportunity despite not being a core holding.
