Real estate investment trusts (REITs) are well-known for their income-producing ability.
One of the factors I look out for before investing in a REIT is whether it is increasing its distribution per unit (DPU). DPU is money that investors receive from investing in REITs.
If a REIT’s DPU manages to climb consistently each year, it could mean that the REIT has a strong business.
With that, here’s a look at three Singapore-listed REITs that raised their DPUs recently, amid DPU cuts by many others.
TL;DR: 3 REITs that posted higher DPU recently
Here’s a five-second summary:
- Keppel DC REIT updated the market that its 2020 DPU surged 21 per cent to 9.17 Singapore cents.
- Mapletree Logistics Trust’s third-quarter DPU grew 1 per cent to 2.065 Singapore cents.
- Parkway Life REIT’s 2020 DPU increased by 4.5 per cent to 13.79 Singapore cents.
REIT 1: Keppel DC REIT
Keppel DC REIT (SGX: AJBU) is a data centre REIT with a portfolio of 19 data centre assets located in eight countries in Asia Pacific and Europe.
The REIT saw robust growth for the whole of 2020.
Gross revenue, net property income, and DPU all grew strongly on a year-on-year basis.
The strong performance was on the back of full-year contributions from Keppel DC Singapore 4 and DC1 as well as new acquisitions in Europe.
DPU for 2020 increased by around 21 per cent to 9.17 Singapore cents, up from 7.61 Singapore cents a year back.
Keppel DC REIT ended off the year with a strong balance sheet as well.
As of Dec 31, 2020, it had a gearing ratio of 36.2 per cent, below the 40 per cent threshold that I look for in REITs . Its interest coverage ratio also remains high at around 13x.
Here’s a visual summary of Keppel DC REIT’s 2020 earnings update:
Keppel DC REIT’s units are currently changing hands at $2.97 each. At that unit price, the REIT has a price-to-book (P/B) ratio of 2.5x and a distribution yield of 3.1 per cent.
REIT 2: Mapletree Logistics Trust
Mapletree Logistics Trust (SGX: M44U) is another REIT featured in our 2021 stocks report .
The logistics REIT, as of Dec 31, 2020, had a portfolio of 156 logistics assets in Singapore, Hong Kong, Japan, Australia, China, Malaysia, South Korea, and Vietnam.
For Mapletree Logistics Trust’s third quarter ended Dec 31, 2020 (3Q FY20/21), gross revenue grew 15.5 per cent to $139.9 million.
The growth was largely due to:
- Higher revenue from existing properties;
- Contributions from accretive acquisitions completed in FY19/20 and FY20/21; and
- Contribution from a completed redevelopment of Mapletree Ouluo Logistics Park Phase 2 in Shanghai.
However, rental rebates granted to tenants impacted by Covid-19 and the absence of contribution from a property divested in FY19/20 partially offset the gross revenue growth.
With property expenses increasing around 20 per cent for the quarter, Mapletree Logistics Trust’s net property income rose 14.9 per cent to S$124.7 million.
For the latest quarter, DPU increased by 1per cent to 2.065 Singapore cents , up from 2.044 cents a year ago. For the nine months ended December 2020, DPU rose 1.2 per cent to 6.165 cents.
As of Dec 31, 2020, Mapletree Logistics Trust’s balance sheet was healthy with a gearing ratio of 36.8per cent and an interest cover ratio of 5x. The REIT doesn’t have any debt due in the current financial year.
Ng Kiat, chief executive of Mapletree Logistics Trust’s manager, said the following about the REIT’s latest results:
“Our 3Q results once again demonstrate the continued resilience of our tenant base and a geographically diversified portfolio. Fortunately, most of our tenants were able to keep their operations stable. However we remain watchful, with the resurgence of virus infections causing disruptions across various cities. We will continue to build and strengthen our geographic network across Asia Pacific, to deliver long term returns to Unitholders.”
At Mapletree Logistics Trust’s unit price of $1.98, it has a P/B ratio of 1.5x and a distribution yield of 4.1 per cent.
REIT 3: Parkway Life REIT
Parkway Life REIT (SGX: C2PU) is a healthcare REITs that owns 54 properties located in Singapore, Japan, and Malaysia.
For Parkway Life REIT’s 2020 financial year, gross revenue rose 4.9 per cent year-on-year to $120.9 million largely due to:
- Contribution from Japanese property acquisitions in December 2019 and 2020;
- Higher rent from its Singapore properties; and
- Appreciation of the Japanese Yen.
Meanwhile, net property income for 2020 rose 4 per cent to $112.5 million and DPU climbed 4.5 per cent to 13.79 Singapore cents, up from 13.19 cents last year.
Just like Keppel DC REIT, the healthcare REIT enjoys a robust balance sheet. As of Dec 31, 2020, it had a gearing ratio of 38.5 per cent and a high interest coverage ratio of 18x.
Parkway Life REIT doesn’t have any long-term debt refinancing need till 2022 as well.
At Parkway Life REIT’s unit price of $4.09, it has a P/B ratio of 2.1x and a distribution yield of 3.4 per cent.
This article was first published in Seedly. Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in the companies mentioned.