2 Quality Singapore REITs That Just Raised Their DPU

August 31, 2023

What is Dividend

In these uncertain economic times, for Singapore dividend investors, we want to be invested into reliable companies.

On the Singapore Exchange (SGX), there are many quality REITs but not many have been able to raise their distribution per unit (DPU) in the first half of 2023.

That’s mainly because of the high interest rate environment. So, for investors in Singapore REITs, it’s important to see which S-REITs have been able to grow their dividends in this challenging period.

With that in mind, here are two quality Singapore REITs that have just announced increases in their DPUs.

1. Parkway Life REIT

For healthcare investors in Singapore, Parkway Life REIT (SGX: C2PU) is a recognisable name as it owns a host of nursing homes in Japan as well as key hospitals in Singapore and Malaysia.

The healthcare REIT reported its latest H1 2023 numbers in late July and it managed to deliver net property income (NPI) of S$70.1 million for the period, a 25.1% increase year-on-year.

More importantly, it also resulted in a 3.3% increase in Parkway Life REIT’s DPU to 7.29 Singapore cents, up from the 7.06 Singapore cents declared in H1 2022.

The REIT continues to be extremely well positioned financially as well, with an incredibly high interest coverage ratio (ICR) of 13.8 times.

In addition, its gearing ratio of 35.3% is well below the 50% MAS-imposed cap and its weighted average lease expiry (WALE) of 16.7 years means revenue visibility is extremely good.

As a result, Parkway Life REIT’s DPU looks to be on a stable footing for investors – proven by its latest H1 2023 DPU hike.

2. CapitaLand Ascott Trust

Given the influx of tourists into Singapore and the rebound in revenge travel across the region, it’s no surprise to see that CapitaLand Ascott Trust (SGX: HMN) is another REIT that has managed to raise its DPU.

It has 107 properties – including hotels, serviced residences, and long-stay student accommodation – across 47 cities in 15 countries.

The majority of its properties are in Asia Pacific and it has total assets under management (AUM) of S$8.1 billion.

As one of the biggest hospitality REITs in Singapore, CapitaLand Ascott Trust has been able to leverage its size and recorded solid results.

It saw its revenue for H1 2023 rise by 30% year-on-year to S$346.9 million while its revenue per available unit (RevPAU) soared 44% year-on-year during the period.

Management attributed a lot of the strong operating performance to the fact that its average daily rate (ADR) had surpassed the pre-Covid-19 level.

The strong demand for hospitality properties, along with the likely continued demand as Asia hosts more outbound Chinese tourists, means that CapitaLand Ascott Trust is in a prime position to benefit in the coming quarters.

Buying consistent dividend growers in the S-REIT universe

For long-term investors in Singapore REITs, it’s key to look at those that can grow their distributions (or dividends) through both good times and bad.

Given the very challenging macroeconomic environment with high interest rates and slowing growth, Parkway Life REIT and CapitaLand Ascott Trust have managed to impress with continued growth of their respective DPUs.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Parkway Life REIT.

Tim Phillips

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.

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