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.

Summary of REITs Financial Results in 1Q2016

Most or all of the REITs in my portfolio have completed announcing their 1Q2016 results. There are some hits and some misses. As shown in the table I summarized below, Distribution Per Unit (“DPU”) increases for 6 out of 11 REITS I am holding while DPU fell for the other 5.

DPU fell for those REITs that focuses on a single industry sector such as industrial, retail or office. REITs like Suntec REIT which has a combination of office and retail survived the economy downturn. Mapletree Commercial Trust did fairly well too as it has a combination of office and retail (Vivocity).

Those with overseas assets did well too. Frasers Commercial Trust has both Singapore and Australian properties. Lippo Malls Indonesia Retail Trust did well as its malls are in Indonesia.

Having said so much, I just want to highlight the importance of diversification of portfolio.

Stock Name

Date Of Release

Of

Financial Results

Dividend Per Unit (DPU)

Increase or Fall

Frasers Commercial Trust Wednesday, 20 January 2016 DPU Increase
CapitaMall Trust Friday, 15 April 2016 DPU Increase
Keppel Reit Thursday, 14 April 2016 DPU Fall
Soilbuild Business Reit Thursday, 14 April 2016 DPU Fall
Suntec REIT Thursday, 21 April 2016  DPU Increase
Mapletree Commercial Trust Tuesday, 26th April 2016   DPU Increase
Parkway Life Reit Tuesday, 26th April 2016   DPU Fall
Far East Hospitality Trust Wednesday, 27th April 2016   DPU Increase
Cambridge Industrial Trust Thursday, 28th April 2016   DPU Fall
Lippo Malls Indonesia Retail Trust Tuesday, 3rd May 2016   DPU Increase
OUE Hospitality Trust Friday, 6th May 2016 DPU Fall

Suntec REIT DPU Rises for 1Q2016

Suntec Logo

On 21st April 2016, Suntec REIT announces its financial results for 1Q 2016. Distribution Per Unit (“DPU”) rises 6.3% to 2.37 cents as compared to 2.23 cents in 1Q2015.

Gross revenue increases to S$78.3 million in 1Q2016 as compared to S$74.5 million in 1Q2015. Net property income also increases to S$54 million as compared to S$51.4 million in 1Q2015. The increase in gross revenue and net property income was attributed to the opening of Suntec City Phase 3 which resulted in higher contribution from Suntec City Office and Suntec Singapore.

With the completion of Phase 3 in June 2015, this marks the end of the Asset Enhancement Initiative (“AEI”).

1Q2016
(S$mil)
1Q2015
(S$mil)
YoY(%)
Gross Revenue 78.3 74.5 5.2
Net Property Income 54.0 51.4 5.1
Distributable Amount 60.0 56.0 7.2
Distribution Per Unit (“DPU”) (cents) 2.371 2.230 6.3

Occupancy

Office occupancy stood at 98.3%.

Suntec REIT 1Q 2016 Office Occupancy

Retail occupancy stood at 98.6%.

Suntec REIT 1Q 2016 Retail Occupancy

Debt

As of 31st March 2016, the total debt outstanding is S$3.046 billion. Debt to asset ratio stood at 34.7%. The average term to expiry is 2.67 years.

Suntec REIT 1Q 2016 Debt Maturity Profile

Net Asset Value

Suntec REIT has a Net Asset Value (“NAV”) of S$2.114.

Lease Expiry

6.0% of the office leases are expiring in FY2016. 23.1% of the retail leases are expiring in FY2016.

Things to Note

Target completion of office and retail asset in Australia, 177 Pacific Highway, Sydney in 2nd half of 2016.

Suntec REIT 1Q 2016 177 Pacific Highway