3 REITs that are paying out more dividends

REITs have been an attractive income-generating asset class for investors since the very first REIT listed on the local bourse back in 2002.

Investors who seek a regular source of passive income have relied on REITs to pay out consistent, growing dividends.

The current Covid-19 pandemic has led to a fall in the distribution per unit (DPU) declared for a wide range of REITs.

As restrictions have eased in recent months, some REITs have seen a recovery.

This rebound has been aided by government assistance schemes such as the Jobs Support Scheme (to prop up businesses) and measures such as the SingapoRediscovers vouchers (to support the ailing local tourism industry).

As a result of this assistance, some REITs have managed to report higher year on year DPU.

Here are three REITs that will be paying out higher dividends in their most recent quarter.

Soilbuild Business Space REIT 

Soilbuild Business Space REIT, or Soilbuild, owns a portfolio of business parks and industrial properties.

Its portfolio comprises 10 properties in Singapore and three in Australia with a total of 4.13 million square feet as of Sept 30, 2020.

For its third-quarter earnings report, the REIT announced that gross revenue had risen by 8 per cent year on year to $22.9 million.

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Net property income (NPI) rose 16.5 per cent year on year while DPU surged by close to 20 per cent year on year to $0.01009.

The improved performance was due to the contribution from Soilbuild’s newly-acquired asset at 25 Grenfell Street in Australia, offset by rent waivers and lower contribution from a property under redevelopment.

Portfolio occupancy rose 3.4 per cent from the second quarter as the manager secured around 197,000 square feet of renewals and new leases during the quarter.

The REIT has around 4.3 per cent of the portfolio by leased area up for renewal for the rest of 2020, and the manager intends to continue to assist affected tenants and improve the quality of the portfolio through asset enhancement initiatives.

Mapletree Logistics Trust 

Mapletree Logistics Trust, or MLT, is a logistics REIT that holds a portfolio of 146 logistics assets in countries such as Singapore, Hong Kong, Japan and China.

For the REIT’s fiscal 2021’s second quarter, gross revenue rose 8.3 per cent year on year to $131.9 million, while NPI increased by 8.9 per cent year on year.

DPU inched up 1.5 per cent year on year to $0.02055. For the first half of the fiscal year, DPU was up 1.2 per cent year on year to $0.041.

The higher rental revenue was underpinned by existing properties as well as contributions from acquisitions completed in the previous fiscal year.

There was also an initial contribution from a redeveloped logistics park located in Shanghai, China.

CEO Ng Kiat commented that the logistics sector is less severely impacted during the pandemic, which has kept the REIT’s portfolio resilient during these challenging times.

MLT had just announced a massive acquisition of 25 logistics properties recently, along with a separate acquisition of a warehousing property in Brisbane, Australia.

These acquisitions are expected to boost the REIT’s assets under management by 13 per cent to $10.1 billion and raise pro-forma DPU as well.

Keppel DC REIT 

Keppel DC REIT is a data centre-focused REIT with a portfolio of 18 data centres spread across eight countries.

For its third-quarter business update, the REIT reported that gross revenue has surged 46 per cent year on year to $67.7 million while NPI has jumped by 47.6 per cent year on year to $62.4 million.

DPU increased by 22.1 per cent year on year to $0.02357, supported by new acquisitions made by the REIT.

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The REIT manager has been engaging in asset enhancement initiatives to increase power capacity and fit out space for client expansion.

These initiatives are estimated to be completed by the first half of 2021 as some were delayed due to Covid-19.

The industry’s prospects look bright as annual spending on cloud services is expected to double in under four years, accelerated by the onset of the pandemic.

This trend, plus the expected 31 per cent per annum increase in global mobile data traffic over the next five years, should ensure steady growth for the REIT.

This article was first published in The Smart Investor. Disclaimer: Royston Yang owns shares in Keppel DC REIT.