Singapore’s real estate investment trusts (REITs) have hit a rough patch in 2022. That’s no surprise with rising interest rates in the US and higher global inflation.
As a result, many Singapore REITs are also starting to have to cut dividends, also known as “distributions”.
This means distribution per unit (DPU) for many investors who hold REITs will gradually fall over the next few quarters.
However, in the grand scheme of things, that’s likely to reverse once the rate hiking cycle slows or pauses.
In the meantime, though, it’s worth understanding if any Singapore REITs can actually continue to post higher DPUs.
So, with that, here are two Singapore-listed REITs that did just that in their latest reporting periods.
1. Sasseur REIT
For higher-yield investors, Sasseur REIT (SGX: CRPU) is a well-known company. That’s because this Chinese premium outlet mall operator currently offers a dividend yield of around 9.8%.
While that does seem rather high – and might normally indicate an imminent cut to the dividend – the REIT’s portfolio performance has actually been solid.
Sasseur REIT owns four premium outlet malls in China; two in Chongqing, one in Hefei, and the final one in Kunming.
In the REIT’s latest Q3 2022 earnings, the REIT saw distributable income up 1.2% year-on-year to S$23.5 million.
That also allowed it to raise its DPU for Q3 2022 by 0.4% year-on-year to 1.838 Singapore cents. The REIT benefits from its unique structure, which sees it peg a portion of rents to tenant sales – which have been recovering in China.
So far in 2022, Sasseur REIT’s DPU is 5.248 Singapore cent (for 9M 2022), up 0.8% year-on-year versus the same period in 2021.
2. Mapletree Pan Asia Commercial Trust
Second up we have Mapletree Pan Asia Commercial Trust (SGX: N2IU), also known as MPACT, the Singapore- and North Asia-focused commercial and retail REIT.
One of Singapore’s largest REITs, by market cap, and a constituent member of the Straits Times Index (STI), MPACT had a robust H1 FY2022/2023(for the six months ending 30 September 2022).
The REIT had an impressive first half of its fiscal year, which saw the all-important DPU rise 12.5% year-on-year to 4.94 Singapore cents.
Clearly, the REIT is benefitting from the strong and rapid recovery in tenant sales as well as shopper traffic in its key Singapore retail property of VivoCity.
That came out in the data, which saw VivoCity notch up solid positive rental reversion of +7.7% during the period.
Given over 60% of MPACT’s net property income (NPI) during H1 FY2022/2023 came from its VivoCity and Mapletree Business City properties, the Singapore economy’s solid trajectory bodes well for dividend investors.
Dividends from retail and commercial REITs
While all Singapore REITs are dealing with the same funding obstacles (higher costs given rising rates), many REITs are still able to expand DPUs.
That’s been down to the improving macroeconomic picture and positive rental reversions. In the commercial and retail segments of the REIT market, that’s where the benefits have shown up most clearly.
For dividend and REIT investors, it’s important to be cognisant of the fact that rising rates doesn’t mean all REITs will cut their DPUs.
With Sasseur REIT and Mapletree Pan Asia Commercial Trust, Singapore investors have two REITs that are still managing to raise dividends in the face of rising interest rates.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.
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.