REITs are well-known for being dependable dividend instruments.
Income-seeking investors rely on them to dole out a steady and reliable stream of passive income.
Not all REITs are made the same, though.
With Singapore being a REIT hub, there are many different types of REITs with exposure to different regions, countries and sub-segments.
Investors need to carefully scrutinise the facts to assess if a REIT may be running into temporary problems, or if there is a structural weakness in the areas it operates.
We highlight four Singapore REITs whose unit prices are touching a year-low.
Some of these could be bargains that may make you want to include them in your dividend watchlist.
OUE Commercial REIT (SGX: TS0U)
OUE Commercial REIT, or OUECR, is a diversified REIT with seven properties spread across the commercial and hospitality sectors in both Singapore and Shanghai.
The REIT’s assets under management (AUM) stood at S$6 billion as of 31 December 2022.
OUECR’s unit price has tumbled by 23.8% in the past year to S$0.32, just a whisker away from its 52-week low of S$0.30.
The REIT reported a downbeat set of earnings for 2022, with revenue dipping by 3.4% year on year to S$241.5 million.
Net property income (NPI) fell by 3.6% year on year while distribution per unit (DPU) slid by 18.5% year on year to S$0.0212.
Things could be looking up for OUECR, though.
It just completed the refurbishment of Hilton Singapore Orchard and its full inventory of 1,080 rooms has been available since the beginning of this year with the opening of the new Orchard Wing.
What’s more, aggregate leverage has come down slightly from 40.3% in September 2022 to 38.8% in December 2022.
The REIT also has no further refinancing requirement until September 2023 when 11.8% of its total debt is due.
Elsewhere, OUECR’s property valuation has also inched up slightly by 2.6% year on year to S$6.17 billion as of 31 December 2022, alluding to the quality of its assets.
Dasin Retail Trust (SGX: CEDU)
Dasin Retail Trust owns a portfolio of seven retail malls in the cities of Foshan, Zhuhai and Zhongshan in China.
The REIT’s unit price has plunged by 53.3% in the space of a year to close at a 52-week low of S$0.14.
For the first nine months of 2022 (9M 2022), the REIT saw a 7.8% year on year fall in revenue to S$70.7 million while NPI declined by 8.3% year-on-year to S$55.2 million.
The manager of Dasin had, earlier this month, terminated the leases of two tenants, Xiaolan and E-Colour, as the rental has been in arrears since February 2021.
These two tenants make up 6.2% of the REIT’s total gross rental income.
Just this week, the retail REIT also terminated lease agreements with Carrefour China and Gome.
Carrefour China was one of the anchor tenants for Dasin’s Ocean Metro Mall while Gome is the sixth largest tenant of the REIT.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, is a US-based retail REIT with 21 predominantly-freehold grocery and necessity-based properties along with two self-storage properties.
The AUM stood at US$738.7 million as of 31 December 2022.
UHREIT’s unit price was cut by a third from S$0.63 to a 52-week low of S$0.42.
For 2022, the retail REIT reported a 22.2% year on year jump in revenue to US$67.5 million.
NPI improved by 12.2% year on year to US$47.1 million.
However, DPU slid 3.6% year on year to US$0.0588.
UHREIT enjoyed a high committed occupancy of 96.9% as of 31 December 2022.
The manager has also announced a new development initiative in St Lucie West to build a property of approximately 63,000 square feet.
To be completed in the first quarter of 2025, the asset will be on a 15-year lease to Academy Sports (NASDAQ: ASO), one of the largest sporting goods retailers in the US.
Investors should also feel reassured as 81.4% of the REIT’s debts are on fixed rates.
Elite Commercial REIT (SGX: MXNU)
Elite Commercial REIT is a UK commercial REIT with a portfolio of 155 freehold commercial buildings with a total value of £466.2 million as of 31 December 2022.
Elite’s unit price has declined by 38.5% in the past year to hit a 52-week low of £0.40.
For 2022, the REIT’s revenue rose 6.7% year on year to £37.1 million but its DPU fell by 11.4% year on year to £0.0481.
The manager released some good news last week showing how 134 of the REIT’s assets will see their rent increase as their leases are pegged to the UK inflation rate.
Only 11 properties will see a slight rental reduction.
Because of this change, the revised rent per annum beginning 1 April 2023 has increased from £31.8 million to £36 million.
Investors should see Elite Commercial REIT reporting higher revenue numbers moving forward while the REIT also enjoys a high occupancy rate of 97.9% as of 31 December 2022.
Not sure which REIT to put your money in? Use our 7-step REIT checklist to find one that fits into your retirement plan. Checklist is inside our latest FREE report “Singapore REITs Retirement Plan”. Click here to download it now.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.