Investors choose to invest in real estate investment trusts (REITs) mainly for income, as REITs are investment vehicles that own income-generating properties. These properties provide steady, consistent and recurring rental income for the REIT, and regulations stipulate that 90% of a REIT’s earnings have to be paid out as distributions to unitholders.
While the stability of a REIT’s distribution is a key attraction for investors, an added bonus will be REITs that are able to deliver consistent increases in their distribution per unit (DPU) over the long-term. Such REITs engage in a variety of methods to grow both their asset bases and their DPU. Such methods include organic growth initiatives such as asset enhancement initiatives and positive rental reversions, as well as acquisitive strategies that are DPU-accretive for the REIT.
Here are four REITs that have witnessed a phenomenal increase in their DPU over the last ten years.
1. Frasers Centrepoint Trust
Frasers Centrepoint Trust (SGX: J69U), or FCT, is a REIT which invests income-generating retail properties located in Singapore’s suburban areas. Its portfolio consists of seven properties – Anchorpoint, Northpoint, Yew Tee Point, Changi City Point, Bedok Point, Causeway Point and a 1/3 interest in Waterway Point.
From 2010 till 2019, FCT has grown its annual DPU from 8.2 Singapore cents to 12.21 Singapore cents (based on annualised DPU from nine-months of its fiscal year 2019), for a total DPU appreciation of 49%. The REIT is offering an annualised 12-month distribution yield of 4.6%.
2. Mapletree Logistics Trust
Mapletree Logistics Trust (SGX: M44U), MLT, invests in a diversified portfolio of logistics real estate and real estate-related assets. Its portfolio consists of 137 properties, as of 30 June 2019, and is spread out among countries such as Singapore, Hong Kong, Japan, Australia, South Korea, China, Malaysia and Vietnam. The total value of the properties is S$7.9 billion.
MLT has grown its annual DPU from 6.02 Singapore cents to 7.941 Singapore cents over 10 years, representing a total increase of 32%. The shares offer a historical distribution yield of around 5.1%.
3. Ascendas REIT
Ascendas REIT (SGX: A17U) is Singapore’s largest business space and industrial REIT, with properties under management of S$11.1 billion as of 31 March 2019. Its portfolio consists of a total of 171 properties – 98 in Singapore, 35 in Australia and 38 in the UK, and the properties house a tenant base of around 1,360 international and local companies from a wide variety of sectors.
Ascendas REIT has managed to grow its annual DPU from 13.1 Singapore cents to 16.035 Singapore cents over the last ten years, for a total increase of 22.4%. Based on FY 2019’s DPU, the units offer a trailing distribution yield of around 5.3%.
4. CapitaLand Mall Trust
CapitaLand Mall Trust (SGX: C38U), or CMT, is the largest retail REIT by market capitalisation, and owns a portfolio of 15 quality shopping malls located in the suburban and downtown core of Singapore.
CMT has managed to grow its annual DPU from 8.85 Singapore cents to 11.5 Singapore cents over 10 years, representing a total increase of 30%. The units offer a historical distribution yield of around 4.4%.
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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. The Motley Fool Singapore has recommended shares of Frasers Centrepoint Trust, Mapletree Logistics Trust, Ascendas REIT and CapitaLand Mall Trust. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.