Looking for Higher DPU? 4 Singapore REITs That Recently Announced Acquisitions or Asset Enhancements

REITs are favoured by income investors as effective income instruments as they are required to pay out at least 90% of their earnings as distributions.

This requirement means that the asset class can be relied on to pay out dependable dividends that serve as a passive source of income.

Investors, however, may be seeking more than just a regular distribution.

Some may be looking for growth in the distribution per unit (DPU) to offset the effects of inflation.

We highlight four Singapore REITs that recently conducted acquisitions or asset enhancements that could result in a higher DPU.

Daiwa House Logistics Trust (SGX: DHLU)

Daiwa House Logistics Trust, or DHLT, is an industrial REIT with a portfolio of 16 modern logistics assets across Japan.

The total assets under management (AUM) stood at around JPY 87.5 billion as of 31 December 2022.

Late last month, DHLT announced the acquisition of D Project Tan Duc 2, a built-to-suit cold storage facility located in Long An Province in Vietnam, for around S$26.5 million from its sponsor.

The property was completed in September 2023 and fully leased to a frozen and chilled food transportation services business for 20 years from October 2023.

This acquisition will be financed with debt and is slated for completion in the second quarter of 2024 (2Q 2024).

Post-acquisition, DHLT’s portfolio valuation will rise by 3.3% to S$847.9 million while the weighted average lease expiry by gross rental income will increase from 6.3 years to 6.9 years.

The purchase is DPU accretive and is forecast to add 1.9% to the DPU of S$0.057 for 2022.

Aggregate leverage will rise from 36.2% to 38.2% after the acquisition is completed.

OUE Commercial REIT (SGX: TS0U)

OUE Commercial REIT, or OUECR, is a diversified REIT with a portfolio of seven properties across the commercial and hospitality sectors in Singapore and Shanghai.

The portfolio’s AUM stood at S$6 billion as of 31 December 2022.

Earlier this month, the REIT announced the completion of a S$22 million asset enhancement initiative (AEI) at Crowne Plaza Changi Airport.

12 new guest rooms were added, including 10 Premier Rooms and two suites, both to cater to long-stay guests and families that promise higher yields for the hotel.

Crowne Plaza also opened a new all-day dining restaurant, Allora, that is scheduled to become the only Italian restaurant with a buffet spread in the Changi Airport area.

The REIT also repurposed the original restaurant dining space into a 352-square metre multi-function room.

This space is suitable for corporate meetings, social gatherings, and wedding celebrations.

The completion of this AEI means that OUECR will be well-positioned for the expected influx of tourists and business travellers as global air travel recovers to exceed pre-pandemic levels this year.

CapitaLand India Trust (SGX: CY6U)

CapitaLand India Trust, or CLINT, is an Indian-focused industrial REIT with a portfolio of nine IT business parks, one logistics park, one industrial facility, and four data centre developments.

The total AUM stood at S$2.7 billion as of 30 September 2023.

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 came up to around S$28.7 million.

This transaction represents the second forward purchase agreement that the Indian REIT entered into with the Casa Grande Group, with the first being a fully leased industrial facility back in May 2022.

With this acquisition, CLINT’s total completed floor area for its portfolio has increased to 19.6 million square feet.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, is a logistics REIT with a portfolio of 189 properties across eight countries.

Its AUM stood at S$13.3 billion as of 30 September 2023.

In December last year, MLT announced the purchase of a modern 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 players.

The lease is for eight years and the land lease has a tenure of 38 years remaining.

This acquisition will be funded by debt and is expected to be accretive to DPU.

Upon completion in the fourth quarter of fiscal 2024, MLT’s aggregate leverage ratio will be approximately 38.9%, still well below the statutory limit of 50%.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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