Income investors are a lucky bunch here in Singapore.
REITs are well-known as an asset class that pays out a steady dividend through good times and bad.
Hence, they are favoured by dividend investors for their stable characteristics and dependable distributions.
Today, the Singapore REIT market is made up of 36 REITs and eight business trusts with a total market capitalisation of around S$113.5 billion as of 20 May 2022.
Investors are spoilt for choice when it comes to the type of REIT they want in their portfolios and which region they prefer to have exposure to.
However, as an income-driven investor myself, I gravitate towards REITs that have a great track record of increasing their distribution per unit (DPU).
The flow of passive income will certainly help you to prepare better for retirement.
Here are three REITs that are ready to raise their DPU even further for the rest of this year.
Frasers Logistics & Commercial REIT (SGX: BUOU)
Frasers Logistics & Commercial REIT, or FLCT, owns a portfolio of 101 industrial and commercial properties worth around S$6.7 billion as of 31 March 2022.
These properties are spread out across five countries – Singapore, the UK, Australia, Germany, and the Netherlands.
FLCT has seen its DPU rising since its fiscal year 2019 (FY2019) ended on 30 September 2020.
FY2019’s DPU was S$0.07 and has risen to S$0.0768 for FY2021.
For its FY2022’s first half (1H2022), revenue inched up 1.7% year on year to S$235.7 million while adjusted net property income (NPI) rose 3.6% year on year.
DPU edged up 1.3% year on year to S$0.0385, with annualised DPU coming in at S$0.077.
At the moment, FLCT’s units provide a forward distribution yield of around 5.8%.
There is scope for the REIT to raise its DPU as its aggregate leverage will stand at just 29.5% after it pays off borrowings of S$395 million last month.
Total debt headroom of close to S$3 billion gives FLCT sufficient firepower for acquisitions that can help boost its payout even further.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 21 data centres worth S$3.5 billion as of 31 March 2022.
The REIT, which was listed in December 2014, has an enviable track record of raising its DPU every year since 2015, with FY2021 registering a DPU of S$0.09851.
For its fiscal 2022’s first quarter (1Q2022), gross revenue dipped by 0.9% year on year while NPI fell by 1.4% year on year to S$60.1 million.
Despite this drop, DPU continued to inch up 0.2% year on year to S$0.02466.
The forward distribution yield stands at 5% for Keppel DC REIT’s annualised DPU of S$0.09864.
The data centre REIT looks ready to continue its unbroken streak of DPU increases.
Last year, it conducted several acquisitions that were yield-accretive, such as the purchase of a London data centre for £57 million and the acquisition of the Eindhoven Campus in the Netherlands for €37.2 million.
In addition, the REIT also made its maiden acquisition in China, scooping up Guangdong data centre for RMB 635.9 million.
Investors need not worry about the rise in electricity prices as the REIT has assured that these costs can be passed through to its clients.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is a logistics REIT that owns a portfolio of 183 properties in eight countries worth S$13.1 billion as of 31 March 2022.
MLT reported a sparkling set of earnings for its fiscal 2022 (FY2022) ended 31 March 2022.
Gross revenue jumped 20.9% year on year to S$678.6 million, contributed by higher revenue from existing properties as well as accretive acquisitions during the fiscal year.
NPI rose 18.6% year on year to S$592.1 million while DPU increased by 5.5% year on year to S$0.8787.
There are two good reasons to be confident that MLT’s DPU can continue to increase.
First off, its aggregate leverage stood at 36.8% as of 31 March 2022 along with a low cost of debt of just 2.2%, providing the REIT with sufficient debt headroom to tap on debt for acquisitions.
Secondly, MLT has a track record of yield-accretive acquisitions in a space that still sees healthy demand due to the boom in e-commerce.
The REIT announced a total of eight acquisitions for FY2022, of which six were completed during the fiscal year and the remaining two are set to close by April and September this year.
Based on this impressive track record, unitholders can look forward to higher DPU in the coming quarters.
Is it a good time to buy into Singapore REITs? If you’ve thought about it, then our latest REITs guide will be an essential read. This exclusive pdf report shows you why REITs are still excellent assets, what sectors to look out for and how to find good REITs today. The info inside can help you build a solid retirement portfolio. Click here to download it for FREE.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclaimer: Royston Yang owns shares of Frasers Logistics & Commercial REIT and Keppel DC REIT.
