fbpx

6 REITs that have raised dividends during the pandemic

REITs

Written by:

Alvin Chow

The pandemic has upended lots of businesses and REITs were not spared.

Many REITs had to cut dividends to hold cash and tide through the lockdown periods. Here are some REITs which have cut their dividends.

I was wondering if there were REITs that have bucked the trend and have increased their dividends during the pandemic.

This could mean that these REITs were resilient and passed the stress test.

I was surprised I could find 6 of them!

The most obvious similarity was that a handful of REITs were into office properties in the US. I’m guessing it’s because their lockdowns were not as long nor as restrictive as what we have experienced in Singapore.

KORE REIT (SGX:CMOU)

Keppel Pacific Oak US REIT has a portfolio of office properties that are located near tech hubs. This makes sense as the economic growth is mainly driven by tech companies today. Any expansion in their operations would increase demand for office space.

You can see the first six months results for KORE REIT whereby the revenue and income have gone up compared to the same period a year ago. The dividend per unit (DPU) was also up by 3.3%.

The management attributed the better performance largely to the contribution from One Twenty Five which was acquired in November 2019. Other than that, new leases, positive rental reversion, and built-in rental escalation have led to higher rental income. But we should also give some credit to them since all these were achieved during the pandemic.

The 3Q results continue to improve even as the pandemic dragged on. The income available for distribution went up 18.5%. Resilient it is.

Manulife US REIT (SGX:BTOU)

Manulife US REIT is focused on grade A offices in the US and have properties in some key gateway cities such as New York and San Francisco.

Manulife US REIT has managed to grow its revenue and income too. DPU was increased slightly by 0.3% for the first half of 2020 which coincided with the heights of the pandemic.

Keppel REIT (SGX:K17U)

Keppel REIT is focused on grade A offices too but in Asia Pacific instead of in the US. Majority of the property value are located in Singapore.

Although Keppel REIT managed to increase its 1H2020 DPU by 0.7%, its property income went down by 7.9%. The distributable income was propped up by capital gains distribution – Bugis Junction Towers was divested. Hence, we cannot really conclude that the property portfolio was resilient in this case.

Keppel DC (SGX:AJBU)

The only data centre REIT in this list.

Keppel DC’s stock performance has been on a tear in recent years – based on its sexy narrative of serving an increasingly digital world and looking at the good financial results we can understand why.

Keppel DC REIT has 6 data centres in Singapore, 4 in Australia, 1 in Malaysia and the remaining 8 in Europe.

The net property income jumped by 32% and the DPU rose 14%.

Mapletree Log Trust (SGX:M44U)

Mapletree Logistics Trust has properties in major countries within the Asia Pacific region. Covid-19 has not affected the logistics business since people who are staying at home would still be in need of supplies. In fact, these logistics properties played a pivotal role to ensure the supply chains didn’t get disrupted.

Gross revenue went up by 9.4% while the DPU rose 1.2%.

Parkway Life REIT (SGX:C2PU)

Parkway Life REIT is the only healthcare REIT in this list. It owns 3 private hospitals (Mt Elizabeth, Gleneagles and Parkway East) in Singapore and numerous nursing homes in Japan.

Many of these private hospitals relied on medical tourism substantially so it was surprising to me that Parkway Life REIT had showed resilience during this pandemic. The tenants were still able to pay higher rents despite the loss of business. On the other hand, nursing homes in Japan should be less impacted.

Revenue rose 5.1% while DPU increased by 1.9%.

Parkway Life REIT continued to outperform and its 3Q2020 DPU rose by a further 3.8%.

Not all REITs are equal – 6 REITs raised their dividends during the pandemic

Despite going through one of the most trying times for REITs, these 6 REITs have managed to raise its dividends. With the exception of Keppel REIT, the remaining 5 REITs had saw higher property income during the pandemic.

Keppel DC REIT performed the best with a 13.6% growth in DPU while Manulife US REIT managed to eke out a 0.3% DPU growth.

REITDPU growth for 1H2020 vs 1H2019
Keppel DC REIT+13.6%
KORE REIT+3.3%
Parkway Life REIT+1.9%
Mapletree Logistics Trust+1.2%
Keppel REIT+0.7%
Manulife US REIT+0.3%

Do you own any of these REITs? Are you happy with their performances?

Would their resiliency be an investment consideration for you when you buy REITs in the future?

Let me know in the comments below!

2 thoughts on “6 REITs that have raised dividends during the pandemic”

  1. Dr Dr Wealth,

    I owned FSL Trust. The share price is between 7-9 cents this year. It has given out dividend of US1.5cents 3 times in past 12 months. So it is total of SGD 6 cents. This is very good return. It has zero net debt and consistent cash flow in past few years. The profit were distorted due to depreciation so many analysts have missed this gems.
    If you could analyse this stock and give your view it would be very much appreciated.

    Best Rgds,
    Richard Teo

    http://www.sharejunction.com/sharejunction/listMessage.htm?topicId=19677&recordCount=0

    Reply
  2. Thank you for this article and for the great information within. I have 5 out of these 6 REITs, I have never held Keppel REIT. I believed Keppel DC REIT’s dividend increase is highly attributable to its acquisition of a data centre last year,… if my memory serves me correctly,… this was because of Singapore DC4. Then there was a special tax treatment which was finally granted by IRAS this year,… and this certainly increased the distributable income further. I remembered seeing the words ‘double-digit dpu-accretion’ in many articles when the acquisition was made last year. I sold-off KORE before the pandemic started in the USA, after everywhere else in the world got hit. I re-entered when the unit price dropped to USD 0.55. I was lucky on this one.

    CK Lai

    Reply

Leave a Comment