2 REITs That Increased Their DPU Last Quarter

EC World Real Estate Investment Trust (SGX: BWCU) and Manulife US Real Estate Investment Trust (SGX: BTOU) are two REITs that delivered strong growth in distributions per unit in the last quarter. Here are a few things you need to know about these REITs.

Banking on E-commerce

EC World REIT specialises in logistics and e-commerce logistics properties in China. The REIT has a portfolio of seven properties, with six located in Hangzhou and one in Wuhan.

In the latest quarter, the REIT recorded growth in all its key figures. Gross revenue and net property income increased by 0.1% and 0.5% respectively. The REIT’s growth was largely due to the contribution from its maiden acquisition of the Wuhan property but offset by a weaker renminbi.

Distributable income and DPU grew at a much faster pace than its topline, increasing 10.0% and 9.0% respectively. The trust benefitted from lower expenses and the absence of a 5% withholding tax that was charged in 2017.

In addition to its strong operating performance, the REIT also has one of the lowest gearing ratios among the REITs listed in Singapore, with a gearing ratio of 30.7%. This figure is also well below the regulatory limit of 45%, giving it plenty of headroom to make debt-funded acquisitions to grow its yield.

Goh Toh Sim, CEO of EC World, remarked that he does not expect the ongoing global uncertainty to have a significant negative impact on the operation of their assets which bodes well for its investors.

Right now, EC World REIT has one of the highest yields in the market at a tasty 8.67%.

Acquisitions driving growth

Manulife US Real Estate Investment Trust is a pure-play US office REIT that owns a portfolio of seven prime and freehold office buildings in the US. It recently made two new acquisitions to expand its portfolio.

In its most recent quarter, gross revenue and net property income increased by 75.3% and 74.9% respectively from to the new acquisitions. More importantly, distribution per unit increased by a whopping 33.6% to US$0.0151.

The performance comes as a nice surprise for investors as the REIT had initially said that the two new acquisitions would have diluted DPU based on a pro forma results of 2017.

On the flipside, with the two latest acquisitions, the REIT’s gearing now stands at 37.4%, just a few percentage points shy of the 45% regulatory limit. This level of debt gives it limited financial flexibility to make debt-funded acquisitions in the future.

At the time of writing, units of Manulife REIT exchange hands at S$0.775. If its DPU is annualised, the REIT will have a yield of 7.8%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Jeremy Chia owns units in EC World Real Estate Investment Trust. Motley Fool has a recommendation for Manulife US REIT.