The REIT sector has been battered over the past year by surging interest rates and soaring inflation.
As a result, it has been tough to find REITs that managed to increase their distribution per unit (DPU).
We uncovered four such REITs in early February that upped their DPUs.
Income investors should take note: here are another four REITs that increased their DPU.
ARA US Hospitality Trust (SGX: XZL)
ARA US Hospitality Trust, or ARAHT, is a hospitality trust with a portfolio of 36 select-service hotels across 18 states in the US.
The portfolio contains a total of 4,700 rooms.
For 2023, revenue inched up 3.8% year on year to US$175.5 million as the lodging market continued to recover.
Net property income (NPI) increased by 15.1% year on year to US$47.7 million.
The hospitality trust’s distribution per stapled security (DPSS) rose 12.3% year on year to US$0.0343.
The US gross domestic product (GDP) growth outperformed expectations for the fourth quarter of 2023 (4Q 2023) to end at 3.3%, with full-year GDP growth coming in at 2.5%.
The unemployment rate in the US also stayed low at 3.7% for December 2023, further fuelling consumer confidence and encouraging spending.
ARAHT’s portfolio enjoyed the all-around better operating performance.
Occupancy rose by four percentage points year on year to 69% while average daily rate (ADR) increased by 5.3% year on year to US$138.
Revenue per available room (RevPAR) jumped nearly 13% year on year to US$96.
Armed with quality assets, ARAHT’s portfolio valuation has remained relatively resilient.
Total portfolio value increased by 0.5% year on year to US$751.4 million, aided by the acquisition of Hilton Hotel during 2023.
Sasseur REIT (SGX: CRPU)
Sasseur REIT is an outlet retail mall REIT with four outlet mall assets in the Chinese cities of Chongqing, Kunming, and Hefei.
The REIT reported a strong set of results for the fourth quarter of 2023 (4Q 2023).
Rental income jumped 21.1% year on year to RMB 170.6 million with distributable income rising by 3.6% year on year to RMB 20.6 million.
Because of a lower amount retailed, Sasseur REIT’s DPU for 4Q 2023 rose 8.7% year on year to S$0.01415.
For the full year 2023, however, DPU dipped by 4.6% year on year to S$0.06249.
The retail REIT has one of the lowest gearing ratios among S-REITs at 25.3% but its weighted average cost of debt has risen from 4.8% in 2022 to 5.6% in 2023.
Its sponsor, Sasseur Group, owns and manages 17 outlet malls with close to 5,000 local and international brands.
Sasseur REIT has the right of first refusal for two of these assets – Sasseur (Xi’an) Outlet and Sasseur (Guiyang) Outlet.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, is a hospitality trust with a portfolio of 12 properties comprising 3,015 hotel rooms and serviced residence units, all located in Singapore.
The portfolio’s value was approximately S$2.5 billion as of 31 December 2023.
In line with the post-pandemic recovery, the trust reported a robust performance for 2023.
Gross revenue climbed 27.8% year on year to S$106.8 million while NPI rose 27.7% year on year to S$98.7 million.
DPSS increased by 25.1% year on year to S$0.0409.
FEHT’s portfolio also saw a slight fair value gain for 2023 of S$59.2 million, attesting to its quality.
Average occupancy rose 6.3 percentage points year on year to 80.1% with the ADR jumping 36.1% year on year to S$170.
RevPAR surged by 47.8% year on year to S$136.
FEHT’s aggregate leverage came in at 31.3%, allowing the hospitality trust sufficient debt headroom for further acquisitions.
The average cost of debt stood at 3.3% but the trust has no loans to refinance for this year.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, is also a hospitality trust with a portfolio of 19 properties worth S$3.3 billion as of 31 December 2023.
Its properties are spread across countries such as Singapore, New Zealand, Australia, Japan, Maldives, and the UK, to name a few.
For 2023, revenue rose 12.3% year on year to S$257.6 million with NPI increasing by 11.8% year on year to S$138.3 million.
DPSS edged up 1.2% year on year to S$0.057.
CDLHT’s Singapore hotels saw occupancy inched up 0.1 percentage points to 76.2% for 2023 with the ADR improving by 18.8% year on year to S$260.
Because of the higher occupancy and ADR, RevPAR increased by 19% year on year to S$198.
The hospitality trust is developing a UK build-to-rent project called The Castings with an expected completion date in the middle of this year.
Both the W Singapore Hotel and Grand Millennium Auckland in New Zealand were also refurbished as part of asset enhancement initiatives in 2023 to enhance their appeal.
The trust has a gearing ratio of 36.7% with a debt headroom of S$835 million to hit the 0% threshold.
Its weighted average cost of debt stood at 4.2% and slightly more than half of its loans are pegged to fixed rates.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
