Which REIT Can Grow Their DPU Over The Years?

Most of us invest in REITs for their dividend yield but what makes a REIT exceptional is the ability of the REIT manager to grow the distribution per unit (DPU) over the years.

Below are the REITs with their annual historical distribution (in cents) I have held in my stock portfolio. The historical distribution can be easily found from the individual REIT website.

As you can see from the line chart I plotted above using the historical distribution, Parkway Life REIT and Frasers Commercial Trust have been able to grow their DPU consistently over the years as the line shows a gradual incline slope. Mapletree Commercial Trust should be able to form an incline slope as well but the line shows a decline because the 4Q2017 results are not yet announced.

Distribution per unit (DPU)for CapitaMall Trust and Suntec REIT looks rather flat over the last few years which reflects the current outlook for shopping malls.

Distribution per unit (DPU)for OUE Hospitality Trust declines as compared to FY14.

As you can see, by plotting the chart, it gives us a high level overview which are the REITs that is capable of growing their DPUs 5 years or more.

FY12 FY13 FY14 FY15 FY16 FY17 % Growth
ParkwayLife Reit 10.31 10.75 11.52 13.29 12.12 13.35 29.5%
CapitaMall Trust 9.46 10.27 10.84 11.25 11.13 11.16 18.0%
Mapletree Commercial Trust 6.487 7.372 8 8.13 8.62 6.77 ** 4.4%
OUE Hospitality Trust NA 2.9 6.74 6.55 4.61 5.14 (23.7)% ^
Frasers Commercial Trust 6.69 7.83 8.51 9.71 9.82 9.82 46.8%
Suntec Reit 9.49 9.328 9.4 10.002 10.003 10.005 5.4%

^ Based on FY14 to FY17 since IPO in FY17

** Not the full year results.

WeWork Leases Office Space From CapitaMall Trust and Frasers Commercial Trust

Recently, while I was flipping through the financial results presentation slides of two REITs, namely CapitalMall Trust and Frasers Commercial Trust, I came across this company called “WeWork” that seem to take up quite a substantial square feet of office space in these two REITs.

WeWork Singapore has committed to lease around 28,700 square feet of space at one of China Square Central’s heritage shophouse blocks. The company had leased 40,000 square feet of office space across two floors of Funan’s North Office Block, becoming Funan’s first office tenant.

Being curious, I looked up the term “WeWork”. This is what I found

WeWork is an American startup company founded in 2010 that provides shared workspace across various countries. Recently, they have acquired Singapore based company Spacemob.

Based on my findings, WeWork has a current valuation of US$20 billion. Wow! That sounds like a strong and robust tenant for both of these two REITs I am holding.

Following Up On Frasers Commercial Trust

Frasers Commercial Trust Logo

I was very much surprised Frasers Commercial Trust was being able to maintain its distribution per unit of 9.82 cents in FY 2017. Based on the current price of S$1.42, the dividend yield is 6.92% which I consider very much attractive compared to other REITs at the moment.

I looked at Frasers Commercial Trust almost one year ago ( Frasers Commercial Trust Long Term Play in Office Rental ). It is time for me to take a look at the recent developments, especially news on HP (“Hewlett-Packard”) on whether they are moving out of Alexandra Technopark.

First, here are the full year financial results for FY17. Given the current development works at China Square, I am not expecting revenue to increase at this moment due to the missing occupancy. I will consider the following results pretty resilient, at least for me. Read More