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.

Increase in Car Park Charges – Car Owners Dismay, Investors Cheer

Car Park

Recently, Housing and Development Board (HDB) and Urban Redevelopment Authority (URA) announced that public car park charges will be increased.

Below are the current rates.

Current Rates New Rates
Regular short term parking $0.50 per half hour $0.60 per half hour
RZ/DA Parking $1.00 per half hour $1.20 per half hour

With the announcement, there are also news that private car park operators and shopping malls will also be revising their parking rates to match public car park charges. The reason is because shopping malls and private car park operators are afraid cars may all flock to private car parks and malls if public car park charges increase. This is especially true for neighborhood malls such as Northpoint, Tampines Mall and Bedok Mall etc. These malls are located near to MRT stations and housing estates and there can be a possibility of cars flocking to park at these malls.

Being a car owner myself, I curse and swear at the increase in public car park charges. However, if shopping malls do increase their car park charges, it may be beneficial to me as an investor as well. Most car parks in shopping malls are owned by retail REITs themselves. Some examples are Capitaland Mall Trust which owns Bedok Mall, Tampines Mall, Junction 8, Lot One Shoppers’ Mall and Bukit Panjang Plaza. Frasers Centrepoint Trust owns Northpoint, Causeway Point, Bedok Point and Yew Tee Point.

The following REITs I found own car park assets.

Parkway Life REIT

What? A healthcare REIT owning car parks? Yes, you are right. Parkway Life REIT owns 69 car park lots belonging to Gleneagles Intan Medical Centre Kuala Lumpur. Not only that, Parkway Life REIT also owns 363 car park lots in Mount Elizabeth Hospital.

Link REIT

Link REIT owns the largest portfolio of car park in Hong Kong. Link REIT owns and manage approximately 76,000 car park spaces in Hong Kong. The car parks are located near retail facilities and Hong Kong public housing estates and thus they serve local residents, shoppers and tenants.

Suntec REIT

Suntec City has 3066 car park lots. MBFC has 697 car park lots. One Raffles Quay has 713 car park lots. Most car park lots in shopping malls are own by the REIT themselves.

Capitaland Commercial Trust

Golden Shoe Car Park is owned by Capitaland Commercial Trust. It has 1053 car park lots.

Conclusion

Although an increase in car park charges will add to the REIT’s total revenue, more research has to be done on the fundamentals of the REIT and whether the increase in car park charges will have a significant impact.

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