REITs have always been popular among Singapore investors due to their stable earnings qualities. Moreover, the better ones can consistently grow their earnings, as well as distributions per unit (DPU), over time. In this article, I’ll look at two REITs that have grown their DPU lately.
REIT No. 1
We will start with SPH REIT (SGX: SK6U). As a quick introduction, SPH REIT is an owner of two retail malls in Singapore, namely, Paragon and Clementi Mall. It also owns a leasehold interest in The Rail Mall. In Australia, SPH REIT owns an 85% stake in Figtree Grove Shopping Centre. Newspaper publisher Singapore Press Holdings Limited (SGX: T39) is the sponsor, manager, and a large unitholder of SPH REIT.
For the quarter ended 31 May 2019, SPH REIT reported that DPU grew 1.5% year-on-year to 1.39 cents. The higher DPU came as a result of better performance. Here are some numbers: Gross revenue grew by 12.7% year-on-year to S$58.3 million. Similarly, net property income improved by 14.2% to S$46.3 million. The stronger performance was due to two new acquisitions – The Rail Mall and Figtree Grove Shopping Centre.
At its current price of S$1.11, SPH REIT has an annualised distribution yield of 5.0%.
REIT No. 2
CapitaLand Commercial Trust (SGX: C61U), or CCT, is the next REIT that I’ll focus on. As a brief introduction, CCT is the largest commercial REIT in Singapore by market capitalisation and is managed by CapitaLand Limited (SGX: C31). The REIT has ownership over nine commercial properties in Singapore and one property in Germany.
Similar to SPH REIT, CCT had a solid quarter recently. For the quarter ended 30 June 2019, CCT grew its DPU by 1.9% year-on-year to 2.20 cents. The higher DPU came as a result of growth in underlying performance: Gross revenue grew 3.0% year-on-year to S$101.0 million while net property income (NPI) improved by 0.8% during the period to S$78.4 million.
At its current price of S$2.16, CCT has an annualised distribution yield of 4.1%.
So there you go, two REITs that have grown their DPU lately. One thing to note here is that both REITs are trading at distribution yields that are lower than the market average of around 6%. Thus, investors should carry out their research before investing in the above REITs.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended shares of CapitaLand Commercial Trust.
Motley Fool Singapore 2019