REITs have been a dependable asset class for dividends for many years.
Many have proven themselves resilient even in the face of challenging economic times, as their portfolio of properties continues to churn out reliable rental income.
Investors, however, need to select REITs with attractive qualities that can enable them to increase their distribution per unit (DPU) over the long term.
And not all REITs have such characteristics.
Those with strong sponsors, a great track record, and quality assets stand head and shoulders above the rest.
Here are four REITs that managed to report higher year on year DPU that can help you beat inflation.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with S$8.6 billion of assets under management (AUM) as of 31 December 2021.
The REIT owns 86 properties in Singapore and 57 in the US comprising a mix of data centres, hi-tech buildings, business parks, and light industrial buildings.
MIT announced its fiscal 2022 third quarter (3Q2022) earnings recently, and it was a pleasing set of numbers.
Gross revenue for the quarter jumped by 31.3% year on year to S$162.4 million while net property income (NPI) climbed by 24.1% year on year to S$122.7 million.
DPU rose by 6.4% year on year to S$0.0349.
The REIT’s trailing 12-month DPU stands at S$0.1361, and its units offer a trailing distribution yield of 5.4%.
MIT’s aggregate leverage stood at 39.9% at end-2021, and it had a low cost of debt at 2.3%. The adjusted interest coverage ratio (ICR) was healthy at 5.9 times.
The REIT is redeveloping the Kolam Ayer 2 cluster of properties that are expected to be fully completed by the first half of 2023.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns 20 data centres in nine countries with an AUM of S$3.4 billion as of 31 December 2021.
The REIT reported a decent set of earnings for its fiscal 2021 (FY2021).
Gross revenue inched up 2.1% year on year to S$271.1 million while NPI increased by 1.6% year on year to S$248.1 million.
DPU rose by 7.4% year on year to S$0.09851, giving the units a trailing distribution yield of 4.6%.
Keppel DC REIT’s portfolio continued to enjoy record-high occupancy of 98.3%, with a long weighted average lease expiry (WALE) of 7.5 years.
Aggregate leverage stood at a comfortable 34.6% with a low cost of debt of just 1.6%.
The REIT had just concluded acquisitions in the UK, Netherlands and China and has sufficient debt headroom for further acquisitions.
The data centre industry outlook remains optimistic with spending forecast to reach US$207 billion this year, up 5.8% year on year.
Suntec REIT (SGX: T82U)
Suntec REIT owns a mix of retail malls and commercial properties in Singapore, Australia, and the UK.
The REIT’s AUM stood at S$12.2 billion as of 31 December 2021.
For FY2021, Suntec REIT reported a sparkling set of earnings , with gross revenue increasing by 13.5% year on year to S$358.1 million due to acquisitions made during the year.
NPI jumped by 27.4% year on year to S$254.6 million while DPU increased by 17.1% year on year to S$0.08666.
Suntec REIT’s units provided a trailing distribution yield of 5.7%.
The leverage ratio stood fairly high at 43.7% with the cost of debt at 2.35%.
The REIT’s Singapore office portfolio occupancy remained high at 97.5% with a positive rent reversion of 3.2%.
Singapore retail saw occupancy at 94.6% but rent reversion was negative at minus 14.4%.
Meanwhile, Suntec REIT’s Australian and UK property portfolio committed occupancy remained high at 94.2% and 98.3%, respectively.
Parkway Life REIT (SGX: C2PU)
Parkway Life REIT, or PLife REIT, is a healthcare REIT with a portfolio of 56 properties worth S$2.3 billion as of 31 December 2021.
The REIT’s portfolio comprises three hospitals in Singapore, 52 nursing homes in Japan, and strata-titled lots in MOB Specialist Clinic in Kuala Lumpur, Malaysia.
For FY2021, the REIT reported that gross revenue dipped slightly by 0.2% year on year to S$120.7 million while NPI inched down 1.1% year on year to S$111.2 million.
DPU, on the other hand, rose by 2.1% year on year to S$0.1408.
PLife REIT’s units had a trailing distribution yield of 2.9%.
With gearing at just 35.4%, the REIT had a debt headroom of around S$686 million before hitting the 50% threshold.
Furthermore, the REIT had no debt refinancing requirement till June next year and had a very low effective cost of debt of just 0.52%.
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Disclaimer: Royston Yang owns shares of Mapletree Industrial REIT, Keppel DC REIT and Suntec REIT.
