The COVID-19 pandemic has caused significant turmoil for businesses.
As you may be aware, REITs have not been spared, as tenants are now facing increasing difficulties in servicing their rental payments as demand for goods and services has all but dried up.
Several REITs, such as SPH REIT (SGX: SK6U) and Frasers Centrepoint Trust (SGX: J69U), have already announced sharp cuts in their distribution per unit (DPU).
Many may follow suit as Singapore’s circuit breaker measures, along with lockdowns and social distancing in other countries, forcibly keep people at home.
Though a set of new measures has been mooted to ease the cash flow crunch for REITs, it may still not be enough to fully offset the pain.
Investors should take heart, though.
There is still a smattering of REITs out there that have grown their dividends. Here are three of them.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a diversified portfolio of 145 logistics assets in Singapore, Hong Kong, Japan, Australia, China, Malaysia, South Korea and Vietnam.
Total assets under management stood at S$8.9 billion as of 31 March 2020.
For its fourth quarter of the fiscal year 2020 (ended 31 March 2020), the REIT reported a 5.5% year on year increase in gross revenue, along with a 1.2% increase in DPU.
For the full fiscal year, DPU increased by 2.5% year on year to S$0.08142. The shares offer a trailing 12-month dividend yield of 4.5%.
Tenants who are the hardest hit by COVID-19 including retail, hospitality and travel industries, make up 10% of MLT’s revenue.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is the first pure-play data centre REIT listed on the Singapore Exchange. As of 31 December 2019, the REIT’s portfolio comprises 17 data centres spanning 10 cities in eight countries.
In its first-quarter 2020 operational update, Keppel DC REIT reported a 25.5% year on year jump in gross revenue.
Net property income improved by 28.3% year on year, and DPU was up 8.6% year on year to S$0.02085 after factoring in the enlarged capital base from the rights issue conducted last year.
Portfolio occupancy remains healthy at 94.7% and the REIT expects demand for data centres to hold up despite the pandemic as they provide support for mission-critical operations.
Higher data traffic is also expected as more people adopt cloud-based solutions for work and telecommute and transact from home.
Low aggregate leverage level of 32.2% also provides debt headroom for further growth through acquisitions.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT is one of Asia’s largest healthcare REITs. It owns a portfolio of 53 properties with a portfolio size of around S$1.96 billion as of 31 March 2020.
The assets include three hospitals in Singapore and 49 quality nursing homes and aged care facilities located in Japan.
For the first quarter of 2020, the REIT reported a 5.2% year on year increase in gross revenue, while DPU inched up 1.4% year on year to S$0.0332.
S$1.7 million will be set aside by the REIT for assistance and support measures for affected tenants.
One of Parkway Life REIT’s Japanese nursing home properties, Palmary Inn Shin Kobe, has confirmed three COVID-19 cases. The property has since been disinfected and remains in operation.
For the moment, the REIT reported that there will be no material financial impact on the REIT arising from this incident.
With share prices battered to multi-year lows, many attractive investment opportunities have emerged. In a special FREE report, we show you 3 stocks that we think will be suitable for our portfolio. Simply click here to scoop up your FREE copy… before the next stock market rally.
Disclaimer: Royston Yang owns shares in Keppel DC REIT.