3 REITs That Have Grown Their Distributions Per Unit For Five Straight Years

Since its introduction in Singapore in 2002, real estate investment trusts (REITs) have become one of the most popular investment vehicles. Not only do REITs provide investors exposure to real estate, they are also more liquid and have lower entry capital requirements than buying properties outright.

With more than 40 REITs and stapled trusts listed in Singapore, investors are certainly spoilt for choice. However, not all REITs can deliver the same returns. In this article, I want to highlight three REITs that have managed to deliver increasing distributions to unitholders over the last five years.

Fortune Real Estate Investment Trust (SGX: F25U) is a Hong Kong- listed REIT that has a secondary listing in Singapore. It invests primarily in sub-urban retail malls located in Hong Kong. The REIT has a strong track record of growing its distribution per unit (DPU). Below is a table showing the REIT’s distribution history in the last five years.

Source: Fortune REIT Investor Relations Website

As you can see, the REIT’s DPU has risen each year from 36 Hong Kong cents in 2013 to 50.78 Hong Kong cents in 2017. That translates to an impressive compounded annual growth rate of 7.1%.

On top of that, Fortune REIT also has one of the lowest gearing ratios (a measure of debt level) among REITs in Singapore of just 27.4%. This gives it HK$12.7 billion in debt headroom to fund further acquisitions. With positive rental reversions reported last year, the REIT has sowed the seeds to continue growing its distributions in the future as well.

Ascendas Real Estate Investment Trust (SGX: A17U) is the largest industrial REIT listed in Singapore with a portfolio of 100 properties in Singapore and 31 in Australia. Despite its size, the REIT has continued to deliver consistent growth in its distributions to unitholders over the last five years. The table below illustrates the REIT’s distribution history.

Source: Ascendas REIT Investor Relations Website

From this table, we can see that Ascendas REIT has grown its full year DPU from 14.24 Singapore cents in FY13/14 to 15.98 Singapore cents in FY17/18. This equates to a commendable 2.3% compounded annual growth. The REIT also managed to achieved a positive 0.7% rental reversion during the latest financial year and improved its portfolio occupancy by 1.3 percentage points from a year ago. This should help to improve its rental income over the next few years.

Frasers Centrepoint Trust (SGX: J69U) invests primarily in sub-urban malls in Singapore. It currently has a portfolio of six malls in Singapore. Its malls are located strategically near train stations and around dense residential areas. This has led to improved rental rates over the last few years. Below is a chart showing the distribution history of the REIT.

Source: Frasers Centrepoint Trust FY2017 Earnings Presentation

The trust has managed to grow its DPU at a CAGR of 1.73% from 10.93 Singapore cents in FY2013 to 11.9 Singapore cents in FY2017. Over the longer term, the REIT has delivered an even more impressive compounded growth of 6.4%.

Despite the recent challenges in the retail scene, Frasers Centrepoint Trust has continued to improved its distributions to unitholders, showcasing the resilience of its portfolio to perform even in harsh economic conditions.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended units of Frasers Centrepoint Trust. Motley Fool Singapore contributor does not own shares in any companies mentioned.