REITs have proven themselves to be resilient income-generating investments that can withstand tough times.
Many REITs also undertake acquisitions and asset enhancement initiatives to grow both their property portfolios and distribution per unit (DPU).
As an income-seeking investor, you should survey the REIT landscape to look for those with strong management and a consistent DPU growth record.
Investors who are worried about rising interest rates should remember that REITs had been through such a period before from 2017 to 2019.
Many of the well-managed ones continued to post higher DPU despite rising finance costs.
Here are five Singapore REITs that increased their year on year dividends this month.
Prime US REIT (SGX: OXMU)
Prime US REIT owns 14 high-quality Class A freehold office properties spread out across 13 US states.
Assets under management (AUM) stood at US$1.7 billion as of 30 June 2022.
For the first half of 2022 (1H2022), the US office REIT’s gross revenue increased 13.5% year on year to US$81.8 million while its net property income (NPI) crept up 9.7% year on year to US$50.8 million.
DPU increased by 5.7% year on year to US$0.0352.
The REIT’s gearing level stood at 37.8% with 86% of its debt on fixed rate or hedged.
The all-in effective interest rate was 2.5% and the REIT only has 4% of its debt coming due this year.
Leasing activity remained healthy for Prime US REIT and it enjoyed a positive rental reversion of 10.9% for the second quarter of 2022 (2Q2022).
Ascendas REIT (SGX: A17U)
Ascendas REIT, or A-REIT, is Singapore’s largest industrial REIT with 228 properties that house more than 1,600 international and local tenants.
AUM stood at S$16.6 billion as of 30 June 2022.
A-REIT posted a solid performance for 1H2022, with gross revenue rising 13.7% year on year to S$666.5 million.
NPI rose 7% year on year to S$476.9 million while DPU edged up 2.8% year on year to S$0.07873.
A-REIT’s portfolio occupancy stood healthy at 94% and enjoyed a positive rental reversion of 9.4%.
Aggregate leverage was 36.7% as of 30 June 2022, with 80% of the REIT’s debt on fixed rates.
Its all-in cost of debt was 2.1% and the interest cover ratio came in healthy at 6.1 times.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, has a portfolio of 12 properties valued at around S$2.3 billion as of 31 December 2021.
For 1H2022, gross revenue dipped by 1.4% year on year to S$41 million due to the divestment of Central Square, but NPI increased by 3.5% year on year to S$37.5 million.
Distribution per stapled security (DPSS) surged by 40% year on year to S$0.0154 and FEHT will distribute a portion of the divestment gains to supplement DPSS while it explores acquisition opportunities.
Aggregate leverage stood at 33.3%, allowing for sufficient debt headroom for acquisitions, while the cost of debt was low at just 1.8%.
Lendlease Global Commercial REIT (SGX: JYEU)
Lendlease Global Commercial REIT, or LREIT, owns a leasehold interest in two retail malls in Singapore (Jem and 313 Somerset) as well as a freehold interest in three office buildings in Milan, Italy called Sky Complex.
These five properties have a value of around S$3.6 billion as of 30 June 2022.
Gross revenue surged by 68.6% year on year for the second half of fiscal 2022 (2H2022) due to the accretive acquisition of Jem mall and better performance from 313 Somerset.
As a result, NPI jumped 72.9% year on year to S$45.9 million while DPU inched up 4.9% year on year to S$0.0245 due to an enlarged unit base.
For FY2022, NPI rose 32.7% year on year while DPU improved by 3.7% year on year to S$0.0485.
Units of LREIT provide a 5.9% historical yield.
The gearing ratio jumped from 27.7% to 40% as of 30 June 2022 due to the REIT taking on debt to acquire Jem.
However, the cost of debt remains low at 1.69% while the interest cover ratio stood healthy at 9.2 times.
Ascott Residence Trust (SGX: HMN)
Ascott Residence Trust, or ART, is Asia Pacific’s largest hospitality trust with an AUM of S$7.6 billion as of 30 June 2022.
Its portfolio comprises 95 properties with more than 17,000 units across 44 cities in 15 countries.
Revenue for 1H2022 surged by 45% year on year to S$267.4 million due to higher revenue from existing properties and the acquisition of longer-stay assets that include student accommodation and rental housing properties.
The distributable amount rose 20% year on year to S$76.7 million, translating to a DPSS of S$0.0233, up 14% year on year.
The REIT enjoyed a 60% year on year increase in its revenue per available room (RevPAU) to S$96 as borders reopened and air travel resumed in earnest.
ART also has new product offerings coming up soon with the redevelopment of Liang Court Singapore and the development of student accommodation properties in South Carolina, USA.
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.
Disclaimer: Royston Yang does not own shares in any of the companies mentioned.