REITs Limited Time Offer!

The Federal Reserve announced that it will cut interest rates to zero as part of its emergency measure to protect the economy from the impact caused by the COVID-19 virus. I thought that this will give the stock market a boost but it didn’t. The stock market plunged further and this makes REITs certainly a lot cheaper at ridiculous prices I have never seen before.

Below are the stocks that I currently held in my stock portfolio. With the dip in stock prices, the current dividend yield had increased which makes certain REITs very attractive. Do expect further downside and do not expect recovery that soon. For long term dividend investors, this should not be much of an issue.

I will probably wait for the stock market to hold steady at current levels before deploying more tranches of my cash.

Stock Name Total Dividends Paid (Cents) (FY19) Closing Price (18th March 2020) Current Dividend Yield (%)
OUE Commercial REIT 3.31 S$0.32 10.34%
Frasers Commercial Trust 9.60 S$1.12 8.57%
Frasers Logistics and Industrial Trust 7.00 S$0.82 8.54%
SPH REIT 5.60 S$0.74 7.57%
ComfortDelgro 9.79 S$1.55 6.32%
CapitaMall Trust 11.97 S$1.83 6.54%
Mapletree Commercial Trust 9.14 S$1.77 5.16%
Parkway Life REIT 13.19 S$2.81 4.69%
ST Engineering 15 S$3.30 4.55%

Straits Times Index Fell 6.03% Due to Oil Price War

Amidst the COVID-19 outbreak which has caused much volatility in the stock market, the stock market plunged further today on the news of Riyadh (Saudi Arabia) slashing crude for April delivery prices. This had sparked the massive sell off of oil related stocks.

The Straits Times Index (STI) took a beating and fell as much as 6.03%. With the massive sell off, this opens up an opportunity in the current stock market.

Below are the stocks that I currently held in my stock portfolio. With the dip in stock prices, the current dividend yield has increased which makes certain REITs attractive. For investors who have been hoping for a dividend yield of at least 5% and above, this is probably the moment you are waiting for.

Stock Name Total Dividends Paid (Cents) (FY19) Closing Price (9th March 2020) Current Dividend Yield (%)
OUE Commercial REIT 3.31 S$0.44 7.52%
Frasers Commercial Trust 9.60 S$1.59 6.04%
Frasers Logistics and Industrial Trust 7.00 S$1.20 5.83%
SPH REIT 5.60 S$0.97 5.77%
ComfortDelgro 9.79 S$1.81 5.41%
CapitaMall Trust 11.97 S$2.39 5.01%
Mapletree Commercial Trust 9.14 S$2.21 4.14%
Parkway Life REIT 13.19 S$3.46 3.81%
ST Engineering 15 S$4.03 3.72%

Mapletree Commercial Trust 3QFY19/20 Financial Results After MBC II Acquisition

Mapletree Commercial Trust has announced their 3QFY19/20 financial results on 22nd January 2020. There are no surprises as all financial results are positive. Income available for distribution increased by 18.0% while Distribution Per Unit (DPU) increased by 5.6%.

It was mentioned that the strong financial performance was driven by the newly acquired Mapletree Business City II (MBC II).

Here are the 3QFY19/20 financial results compared with 3QFY18/19.

3QFY19/20
(S$’000)
3QFY18/19
(S$’000)
Change
Gross Revenue 131,336 112,543 16.7%
Net Property Income 103,298 87,868 17.6%
Distributable Income 79,049 66,992 18.0%
Distribution Per Unit (“DPU”) (cents) 2.46 2.33 5.6%

Debt

As of 31st December 2019, the gearing ratio stood at 33.4%. The average term to maturity of debt is 4.4 years.

Occupancy

Overall portfolio committed occupancy stood at 98.9%.

One of the things that worry me is the decline of shopper traffic. As you can see, shopper traffic declined by 2.2% while tenant sales decreased by 0.5%.

Mapletree Business City II (MBC II)

The acquisition of MBC II seems positive. Below are the increase in DPU, NPI yield and NAV per Unit after the acquisition.

Summary

Overall, Mapletree Commercial Trust has delivered a set of decent results after the acquisition of MBC II. However, I think it is still too early to make a judgement whether the acquisition can continue to be DPU accretive or slow down the growth of the DPU.

Mapletree Commercial Trust currently makes up 11% of my stock portfolio.