The Smart Investor
    Facebook Instagram
    Sunday, October 1
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»REITs»3 REITs That Announced Acquisitions to Grow Their DPU
    REITs

    3 REITs That Announced Acquisitions to Grow Their DPU

    These three REITs have recently announced yield-accretive acquisitions to boost their DPU.
    Royston YangBy Royston YangAugust 12, 20214 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    Income-seeking investors love receiving a stream of steady, dependable dividends.

    In this vein, REITs are one of the most effective vehicles for dividend investors as they are mandated by law to payout 90% of their earnings.

    Not only are REITs suitable as income instruments, but by choosing the right REITs, investors can enjoy some measure of growth as well.

    There are several effective ways for REITs to grow their distribution per unit (DPU) over time.

    Other than organic methods such as rent reversion and asset enhancements, a third popular method involves acquisitions.

    Acquisitions not only help to grow a REIT’s asset base but usually also boost its DPU.

    Here are three REITs that recently announced yield-accretive acquisitions.

    Keppel Pacific Oak REIT (SGX: CMOU)

    Keppel Pacific Oak REIT, or KORE, invests in a diversified portfolio of commercial properties in key growth markets in the US.

    The REIT owns a portfolio of 13 office properties spread out across eight key cities in the US.

    For its fiscal 2021 first half (1H2021), the REIT reported a slight dip in gross revenue, down 3% year on year to US$68.4 million.

    DPU, however, inched up 1.9% year on year to US$0.0316.

    In late July, KORE announced the acquisition of two office buildings, one in Nashville, Tennessee and the other in Denver, Colorado, for US$105 million.

    The acquisition will be funded via a combination of equity and debt.

    Both properties are 100% occupied, with the Nashville property providing a pro-forma net property income (NPI) yield of 7.8% and the Denver property yielding 6.7%.

    These two acquisitions will increase KORE’s portfolio to 15 freehold properties and will also increase the portfolio’s overall occupancy rate from 90.5% to 91.2%.

    Pro-forma DPU is estimated to rise by 0.8% from US$0.0623 to US$0.0628.

    Cromwell European REIT (SGX: CWBU)

    Cromwell European REIT, or CEREIT, is a pan-European REIT that invests in real estate across Europe that are used for office, light industrial, logistics or retail purposes.

    The REIT’s portfolio consists of 109 properties valued at around EUR 2.3 billion as of 4 August 2021.

    The REIT announced its first freehold property acquisition in the UK recently for GBP 10 million.

    The property has a floor area of around 9,764 square metres and is fully occupied.

    The property was last refurbished this year and has a weighted average lease expiry (WALE) of 10 years.

    The UK is one of the most liquid real estate markets in Europe and has a growth forecast of 7.3% for 2021, aided by a swift COVID-19 vaccine roll-out that has seen around 71% of the population receiving both doses.

    The net operating income yield for the property is 5.6% and is aligned with the REIT’s purpose of delivering DPU growth to unitholders.

    Keppel DC REIT (SGX: AJBU)

    Keppel DC REIT is a data centre REIT that owns a portfolio of 19 data centres across eight countries as of 30 June 2021.

    Assets under management stood at S$3.1 billion.

    The REIT announced a respectable set of earnings for 1H2021, with gross revenue rising by 9% year on year to S$135.1 million.

    NPI rose by 8.4% year on year to S$123.8 million while DPU improved by 12.5% year on year to S$0.04924.

    Keppel DC REIT also announced its first acquisition this year, that of a fully-fitted data centre facility in Jiangmen, Guangdong province, China for around S$132 million.

    This is also the REIT’s maiden data centre acquisition in China, and the property will be leased back to Bluesea (the seller) on a triple net basis (i.e. all expenses to be borne by the lessee) for 15 years.

    The property was purchased at a 7.8% discount to its independent valuation and is expected to be accretive to the REIT’s DPU.

    This acquisition is also beneficial for the overall portfolio’s operating metrics, with occupancy rising from 98% to 98.2% and WALE jumping from 6.5 years to 7.3 years.

    Leverage will only rise slightly to 37.5% post-completion, leaving plenty of debt headroom for the REIT to borrow to make more such yield-accretive acquisitions.

    Here are 5 cash-rich companies so healthy, they can pay you dividends for life. The names of these SGX stocks are in our special FREE report. Download it here and start building your dream retirement portfolio today!

    Follow us on Facebook and Telegram for the latest investing news and analyses!

    Disclaimer: Royston Yang owns shares of Keppel DC REIT.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    (TSI) inflation

    Get Smart: A Simple Way To Beat Inflation

    October 1, 2023

    Top Stock Market Highlights of the Week: Singapore’s Inflation, Alibaba’s Logistics IPO, City Developments Limited and Grab Holdings

    September 30, 2023
    (TSI) Investment moats

    The Importance of Investment Moats

    September 29, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.