REITs are preferred by income investors as an effective means of income because they must pay out at least 90% of their income as distributions.
This requirement means that the asset class can rely on reliable dividend payments that act as a source of passive income.
But investors may be looking for more than just regular distributions.
Some may be hoping for an increase in distribution per unit (DPU) to offset the impact of inflation.
We highlight four Singapore REITs that have recently made acquisitions or asset enhancements that could result in higher DPUs.
Daiwa House Logistics Trust (SGX: DHLU)
Daiwa House Logistics Trust (DHLT) is an industrial REIT with a portfolio of 16 modern logistics assets across Japan.
Total assets under management (AUM) is approximately 87.5 billion yen as of December 31, 2022.
Late last month, DHLT announced that it had acquired D Project Tan Duc 2, a prefabricated refrigeration facility located in Vietnam’s Long An Province, from its sponsor for approximately S$26.5 million.
The property will be completed in September 2023, and will be fully leased to a frozen and refrigerated food transportation service provider for 20 years starting in October 2023.
The acquisition will be debt-financed and is expected to close in the second quarter of 2024 (Q2 2024).
Following the acquisition, DHLT’s portfolio valuation will increase by 3.3% to S$847.9 million and the weighted average lease expiration period by gross rental income will increase from 6.3 years to 6.9 years.
This purchase is expected to increase DPU by 1.9% to S$0.057 in 2022.
After completion of the acquisition, total leverage will increase from 36.2% to 38.2%.
OUE Commercial REIT (SGX: TS0U)
OUE Commercial REIT (OUECR) is a diversified REIT with a portfolio of seven properties across the commercial and hospitality sectors in Singapore and Shanghai.
The portfolio has assets under management of S$6 billion as of December 31, 2022.
Earlier this month, the REIT announced the completion of a S$22 million asset enhancement initiative (AEI) at Crowne Plaza Changi Airport.
Twelve new rooms have been added, including 10 premier rooms and two suites, both aimed at extended stay guests and families looking to increase the hotel’s profitability.
Crowne Plaza will also open a new all-day dining restaurant, Arora, which will be the only Italian restaurant in the Changi Airport area to offer a buffet.
The REIT also repurposed the original restaurant’s dining space into a 352 square meter function room.
This space is suitable for corporate meetings, social gatherings and wedding celebrations.
The completion of this AEI means OUECR is well-positioned for the anticipated influx of tourists and business travelers as global air travel recovers above pre-pandemic levels this year.
CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust (CLINT) is an India-focused industrial REIT with a portfolio of nine IT business parks, one logistics park, one industrial facility, and four data center developments.
As of September 30, 2023, total assets under management were S$2.7 billion.
Last month, CLINT announced the completion of two fully leased industrial facilities. One to an international electronics manufacturer and the other to a global energy solutions provider.
The total consideration amounted to approximately S$28.7 million.
This transaction is the second forward purchase agreement that the Indian REIT has entered into with Casa Grande Group, the first being for a fully leased industrial facility in May 2022.
This acquisition increases the completed floor space in CLINT’s portfolio to 19.6 million square feet.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust (MLT) is a logistics REIT with a portfolio of 189 properties across eight countries.
As of September 30, 2023, assets under management are S$13.3 billion.
In December last year, MLT announced that it had purchased a state-of-the-art Grade A warehouse in Delhi-NCR, India for approximately S$14.5 million.
The property is located in a prime logistics market and is fully occupied by one of India’s largest third-party logistics companies.
The lease contract is for eight years, and the remaining term of the land lease contract is 38 years.
The acquisition will be debt-financed and is expected to be accretive to DPU.
Upon completion in the fourth quarter of 2024, MLT’s total leverage ratio will be approximately 38.9%, still well below the statutory limit of 50%.
In our latest report, we take a closer look at five outstanding Singapore REITs offering dividend yields above 5.5%. Why settle for less? Get more dividends in your bank account with our REIT guide. Click here to download it for free now.
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Disclosure: Royston Yang owns no shares in any companies mentioned.