In fact, one of the oldest listed REITs in Singapore – Suntec REIT (SGX: T82U) – last week reported its Q3 2021 numbers.
Here are eight key figures from those earnings that dividend investors should be aware of.
Recovering DPU payout
Suntec REIT owns 11 commercial and retail properties across Singapore, the UK and Australia and has S$11.5 billion in assets under management (AUM).
For Suntec’s latest third-quarter earnings these were some key numbers:
Net property income increased 45.5% year-on-year to S$68.8 million
Distribution per unit (DPU) rose 20.8% year-on-year to 2.232 Singapore cents
Office and retail made up 86% and 14% of net profit income, respectively
Suntec City (Office & Retail) contributed 40% of the S$99.1 million in net profit income during the period
All-in financing cost dropped to 2.32% p.a. at the end of the third quarter from 2.42% p.a. at the end of the second quarter
Aggregate leverage ratio (also known as “gearing) rose slightly to 44.3% as of the end of Q3 2021 versus 43.1% at the end of Q2 2021.
Suntec City Office committed occupancy rate was 95.5%, up from 93.4% in Q2 2021, but down from 97.0% in Q3 2020
The Minster Building, City of London office building acquisition was completed by Suntec during the quarter for £353 million (S$489.4 million)
While it was an overall positive quarter for Suntec REIT, as lower rental assistance for retail tenants helped boost the bottom line and DPU, there were some lingering questions.
Future of office and retail?
Primarily, investors should be concerned about where the future lies for REITs such as Suntec given the Covid-19 pandemic has thrown into doubt how in demand office and retail properties will be in future.
If you believe in “value” then Suntec REIT looks like a compelling opportunity – offering a 5% dividend yield and trading at an over-25% discount to its net asset value (NAV).
Yet that has come with some pretty poor performance. Suntec REIT’s unit price is down 10% over the past five years and has fallen 20% over the past decade.
Partly, that has to do with anaemic DPU growth – the one key metric all REIT investors focused on dividends should watch.
In 2006, Suntec REIT paid out a full-year DPU of 7.31 Singapore cents. In 2020, that full-year DPU had basically stayed flat at 7.4 Singapore cents.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.