REIT unit prices can fall for a myriad of different reasons.
For instance, there could be pessimism directed towards a particular REIT sub-sector due to the pandemic, causing valuations there to remain depressed.
Or, a REIT’s unit price could have run up due to excessive optimism, with investors subsequently adjusting their expectations.
Whatever the reasons, such instances could result in the unit prices of well-managed REITs plumbing lows not seen in a while.
Income-seeking investors who are looking for steady dividends can turn their attention to REITs that have fallen to their 52-week low.
Such declines may signal undue pessimism for a REIT and open up opportunities for investors to scoop up shares at a bargain.
Here are three REITs that are either trading at their 52-week lows, or are very near such levels.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, owns a portfolio of 15 hotels and two resorts comprising 4,631 rooms as of 30 June 2021, as well as a retail mall.
The REIT’s assets under management (AUM) stands at around S$2.9 billion.
CLDHT’s share price closed at S$1.06 recently, not far from its 52-week low of S$0.97 in November last year.
For its fiscal 2021 first half, the REIT reported a mixed set of earnings.
Revenue rose 27.2% year on year to S$66.2 million while net property income (NPI) jumped by 24.4% year on year to S$37 million.
However, distribution per unit (DPU) fell by 19.2% year on year to S$0.0122 as CDLHT’s portfolio continues to be impacted by restrictions.
Unitholders, however, can look for brighter days ahead for the REIT.
It recently expanded its investment mandate to include real estate used for rental housing, student accommodation assets, and properties for senior housing.
In line with this change in investment mandate, CDLHT announced its maiden entry into the build-to-rent sector in the UK that is poised to increase its DPU by 2.2%.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns 19 data centres across eight countries.
Its AUM stood at S$3.1 billion as of 30 June 2021.
The REIT has plunged to a new 52-week low of S$2.38, down more than 21% from the S$3.03 in February this year.
However, Keppel DC REIT reported a sparkling set of numbers for 1H2021.
Gross revenue rose 9% year on year to S$135.1 million while NPI increased by 8.4% year on year to S$123.8 million.
DPU increased by 12.5% year on year to S$0.04924.
Annualised distribution yield stands at 4.1% at the REIT’s latest unit price.
Portfolio occupancy also remains high at 98% and the REIT’s aggregate leverage is 36.7% as of 30 June 2021, providing it with sufficient debt headroom for more acquisitions.
Speaking of acquisitions, the REIT had just announced two acquisitions in the last three months.
Keppel DC REIT made its maiden foray into China with the purchase of a seven-storey data centre in Guangdong for around S$132 million.
This transaction is expected to close in the second half of 2021 and add to DPU.
Next, Keppel DC REIT announced the acquisition of its third data centre in Eindhoven, the Netherlands.
This data centre will be on a double net lease to a global IT services provider, and the REIT forked out around S$59.9 million for this asset.
With two DPU-accretive acquisitions under its belt and continued robust and resilient data centre demand, investors can look forward to better numbers down the road.
Manulife US REIT (SGX: BTOU)
Manulife US REIT owns a portfolio of nine prime, freehold and trophy or class A office properties in the US.
The portfolio enjoys an occupancy rate of 91.7% as of 30 June 2021 and is valued at around US$2 billion.
Manulife US REIT’s unit price last traded at US$0.70, not far from its 52-week low of US$0.65 in March this year.
The REIT has seen pressure from the pandemic as gross revenue for 1H2021 declined by 7.9% year on year to US$90.8 million.
NPI dipped by 9.8% year on year to US$56.1 million.
DPU fell by 11.5% year on year to US$0.027.
Dividend yield based on the REIT’s annualised DPU stands at 7.7%.
The REIT’s occupancy rate has also dipped from 93.4% at the end of 2020 to the current 91.7%.
On a brighter note, Manulife US REIT reported strong leasing momentum, with around 28,000 square feet of leases signed from 1 July to 10 August this year.
The REIT’s gearing as of 30 June 2021 stood at 42.1%, inching closer to the maximum of 50% mandated by the central bank.
The REIT expects the sanguine economic conditions to continue, with the US 2021’s GDP growth forecasted at 7%.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT.