Real Estate Investment Trusts (REITs) have grown in popularity in Singapore. Besides providing relatively high yields, REITs also offer exposure to a wide range of assets. With that in mind and with earnings season having just ended, here are two REITs that have delighted shareholders with a bump up in DPU.
Riding on the growth of the Chinese consumer
Sasseur Real Estate Investment Trust (SGX: CRPU) saw its entrusted manager agreement (EMA) rental income increase by 2.7% on a comparable basis in the second quarter of the year. More importantly, the REIT which owns four outlet malls in China rewarded unitholders with a 5.9% increase in distribution per unit (DPU).
The REIT’s EMA rental income has a fixed portion that is stable and a portion that is tied directly to tenant sales. With the Chinese consumer market continuing to grow, tenant sales in Sasseur REIT’s malls have increased on a year-on-year basis.
Its most mature mall, Chongqing, reported a 10% increase in tenant sales in the first six months of 2019. Its newer malls, Hefei and Kunming, saw tenant sales increase by 30.5% and 33.6% respectively.
The number of VIP members as its malls increased by 39.7% so far this year. As VIP members contribute close to 50% of all tenant sales, the increase in VIP members is a good sign for future sales growth.
At the time of writing, units of Sasseur REIT trade at S$0.79 each, which translates to a dividend yield of 8.5% and a price-to-book ratio of 0.92.
Lifted by office rent rebound
CapitaLand Commercial Trust (SGX: C61U) rewarded unitholders with a 1.9% increase in DPU in the second quarter of 2019. The improved performance is due to the contribution from the acquisition of Galileo, a property acquired in May last year and a better performance from its Singapore portfolio.
Grade A office rental rates in Singapore are also rising steadily, with market rents up 1.3% quarter-on-quarter and 4.6% so far this year. The average gross rent per month for the REIT’s portfolio in Singapore rose from S$9.71 in March to S$10.05 in June.
There could be more good news in the coming quarters as CapitaLand Commercial Trust’s expiring rent is below the market rent of S$11.30 per square feet. As such, the REIT will be in a position to negotiate higher rental rates with its tenants.
At the time of writing, CapitaLand Commercial Trust had an annualised distribution yield of 4.2% and a price-to-book ratio of 1.14.
Want to keep reading on how to lock in those sweet REIT dividends? Our Complete Guide To Buying The Best Singapore REITs dives into what we think you need to know about finding the best REITs that regularly hand you a fat dividend cheque. Click here to download your FREE guide.
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 shares in Sasseur Real Estate Investment Trust. The Motley Fool Singapore has a recommendation on CapitaLand Commercial Trust.