There is light at the end of the tunnel for REITs.
After more than a year of movement restrictions, some countries are starting to progressively reopen their economies.
China has been swift in stamping out the virus outbreak and has been one of the success stories during the entire coronavirus saga.
Singapore is also seeing increasing success in tackling the virus, with 38% of the population fully vaccinated as of 28 June.
With vaccinations picking up pace, the target is to have two-thirds of the population fully vaccinated by National Day, which is a month away.
The next target is to hit a 75% vaccination by October this year, after which the country can open up more completely.
As vaccination rates increase, we should see movement restrictions loosen, a positive sign for shopping malls and offices.
REITs with properties here will continue to enjoy the upswing as the economy progressively opens up.
Here are five REITs that recently reported double-digit year on year increases in distributions.
Mapletree Commercial Trust (SGX: N2IU)
Mapletree Commercial Trust, or MCT, owns a portfolio of Singapore real estate assets used for retail and commercial purposes.
As of 31 March 2021, the REIT owns five properties with a total asset value of S$8.7 billion.
For its fiscal year ended 31 March 2021 (FY2021), MCT reported a 0.8% year on year dip in gross revenue.
Full-year performance was cushioned by the impact of the addition of MBC II’s contribution to the portfolio.
Distributable amount jumped by 29.4% year on year as it included around S$28 million released from retained cash carried forward from the fourth quarter of the fiscal year 2020.
As a result, distribution per unit (DPU) surged by 18.6% year on year to S$0.0949.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT that owns 10 malls and an office building in Singapore.
As of 31 March 2021, assets under management (AUM) for the REIT stood at S$6.4 billion.
FCT’s fiscal 2021 half-year ended 31 March 2021 saw a sharp improvement in financial performance.
Gross revenue surged by 73.8% year on year while net property income (NPI) increased by the same percentage.
DPU rose 28.4% year on year to S$0.05996.
The better performance was contributed by the addition of properties from FCT’s acquisition of AsiaRetail Funds Limited’s portfolio of five malls last year.
FCT’s malls also saw an 11.7% year on year increase in tenant sales for February 2021, pointing to a strong rebound in spending.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns 19 data centres spread across eight countries.
As of 31 March 2021, the REIT’s AUM stood at almost S$3 billion.
The REIT reported a healthy set of numbers for its fiscal 2021 first quarter (1Q2021) operational update.
Gross revenue improved by 10.6% year on year to S$66.7 million while NPI increased by 10% year on year to S$61 million.
DPU jumped by 18.1% year on year to S$0.02462.
The better performance was supported by a new acquisition by the REIT as well as asset enhancement initiatives (AEI).
Sasseur REIT (SGX: CRPU)
Sasseur REIT owns a portfolio of four retail outlet malls in China.
These malls are located in fast-growing cities such as Chongqing, Kunming and Hefei.
The REIT’s properties experienced a strong recovery from the pandemic, while AEI resulted in greater diversity in the trade mix, helping to attract more shoppers.
For its 1Q2021 earnings, rental income jumped by 23.7% year on year to RMB 157.4 million, leading to a 47.8% year on year surge in distributable income.
DPU climbed by 31.9% year on year to S$0.01759 for the quarter.
The REIT’s aggregate leverage, at 27.6% as of 31 March 2021, remains much lower than the statutory limit of 45%.
The weighted cost of debt also fell to 3.3% from 4.3% three months ago, providing sufficient headroom for acquisitions.
EC World REIT (SGX: BWCU)
EC World REIT is a specialised logistics and e-commerce logistics REIT that owns a portfolio of eight Chinese properties in one of the largest e-commerce clusters in Hangzhou and Wuhan.
For 1Q2021, gross revenue increased by nearly 31% year on year due to the absence of one-off rebates doled out to tenants.
NPI also jumped by 30.9% year on year to S$27.7 million.
DPU after retention rose by 32.3% year on year to S$0.01532.
With leverage at 38.3% and the cost of debt at 4.1%, the REIT still has room for further DPU-accretive acquisitions.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
