4 REITs that could up their DPU in 2023
It was a volatile year for the REIT industry, as high inflation and soaring interest rates combined dampened asset class sentiment.
However, REITs can use various methods to protect their per-unit allocations (DPUs). These include acquisitions that increase DPUs and rent adjustment, redevelopment and asset enhancement programs (AEI).
With these measures in place, REITs can mitigate the decline in DPUs and report higher DPUs next year.
Here are four REITs that could increase DPUs in 2023:
1. Digital Core REIT
Digital Core REIT just acquired a 25% stake in the Frankfurt data center for $146 million, 1H2022 DPU is expected to rise 2% to $0.021.
With this acquisition, DCR's total leverage is expected to increase to 33%, allowing REIT to continue to leverage debt for future acquisitions.
2. Mapletree Pan Asia Commercial Trust
MPACT's DPU for the first half of FY2023 (1H2023) increased by 12.5% YoY to S$0.0494 as both gross and net property income grew by 44.9% YoY.
With China easing its COVID-zero policy, investors can expect higher contribution from MPACT's key retail asset in Hong Kong.
Festival Walk contributed around 11.7% of 1H2023 NPI, and a recovery in tenant sales and traffic could generate better rental income for the REIT.
3. CapitaLand Ascendas REIT
The industrial REIT has been active in acquisitions and announced S$296.7 million worth of acquisitions during the quarter.
With a total leverage of 37.3% and a low cost of debt of 2.2%, CLAR is well positioned to make more acquisitions that will increase returns.
The REIT also has a series of ongoing projects such as redevelopments and AEIs totaling S$622.4 million that should increase rental income over time.
4. Frasers Logistics & Commercial Trust
As of 30 September 2022, FLCT's debt ratio was only 27.4%, providing it with S$3.2 billion of debt headroom for future acquisitions.
In addition, nearly 82% of FLCT's borrowings are at fixed interest rates, thereby mitigating the sharp rise in financing costs.
Management also demonstrated its ability to recover capital by divesting Cross Street Exchange at a premium of 28.3% above its book value.
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Venture118 : Dirt cheap with 12%DUP at current price is a steal
wytzz : What kind of operations have you been doing recently?
YC Xiao : Waiting. ..... thanks
b34r : ^ which of the 4 reits are we discussing here?