The very basic things we should consider when investing in REITs are non other than DPU and yield.
DPU
DPU, the Distribution per Unit, is how much dividend we get for every unit/share of the REIT. This information can be easily found in the SGX portal @ www.sgx.com, under "Listed Companies" -> "Corporation Action". Example select CapitaMall Trust for Company Name, select Dividend for the Category. Following is what you should see for the DPU since January 2009 for CapitaMall Trust (CMT):
| Company Name | Expiry Date | Record Date | Date Paid/Payable | Particulars |
|---|---|---|---|---|
| CAPITAMALL TRUST | 28 Oct 2009 | 30 Oct 2009 | 26 Nov 2009 | 010709-300909 SGD 0.0228 LESS TAX |
| CAPITAMALL TRUST | 28 Oct 2009 | 30 Oct 2009 | 26 Nov 2009 | 010709-300909 SGD 0.0007 TAX EXEMPT |
| CAPITAMALL TRUST | 30 Jul 2009 | 3 Aug 2009 | 28 Aug 2009 | 010409-300609 SGD 0.0001 TAX EXEMPT |
| CAPITAMALL TRUST | 30 Jul 2009 | 3 Aug 2009 | 28 Aug 2009 | 010409-300609 SGD 0.0006 |
| CAPITAMALL TRUST | 30 Jul 2009 | 3 Aug 2009 | 28 Aug 2009 | 010409-300609 SGD 0.0206 LESS TAX |
| CAPITAMALL TRUST | 23 Apr 2009 | 27 Apr 2009 | 28 May 2009 | 010109-310309 SGD 0.0004 |
| CAPITAMALL TRUST | 23 Apr 2009 | 27 Apr 2009 | 28 May 2009 | 010109-310309 SGD 0.0192 LESS TAX |
| CAPITAMALL TRUST | 23 Apr 2009 | 27 Apr 2009 | 28 May 2009 | 010109-310309 SGD 0.0001 TAX EXEMPT |
| CAPITAMALL TRUST | 30 Jan 2009 | 3 Feb 2009 | 27 Feb 2009 | 011008-311208 SGD 0.0361 LESS TAX |
| CAPITAMALL TRUST | 30 Jan 2009 | 3 Feb 2009 | 27 Feb 2009 | 011008-311208 SGD 0.0001 TAX EXEMPT |
| CAPITAMALL TRUST | 30 Jan 2009 | 3 Feb 2009 | 27 Feb 2009 | 011008-311208 SGD 0.0003 |
So from the above, the latest DPU with Expiry Date on 28 OCT 2009 = SGD 0.0228 + SGD 0.0007 = SGD 0.0235, which is SGD 23.5 per lot of 1000 units.
For SREITs, the DPU is given either quarterly (4 times per year) or semi-annually (2 times per year). From the above table, base on the Dates of Expiry or Date Payable, we can see that CapitaMall Trust distributes the DPU every quarter. Following are the details of the SREITs distribution frequency:
[Update as at 10 Nov 2010]
(For latest DPU Information please visit the DPU Information Page)
| REIT | Frequency of Distribution |
| AscendasReit | Quarterly |
| AIMSAMPIReit | Quarterly |
| AscottReit | Semi-Annually around Jul and Jan period. |
| Cache | Quarterly |
| Cambridge | Quarterly |
| CapitaComm | Semi-Annually around Jul and Jan period. |
| CapitaMall | Quarterly |
| CapitaRChina | Semi-Annually around Jul and Jan period. |
| CDL H-Trust | Semi-Annually around Jul and Jan period. |
| FirstREIT | Quarterly |
| Fortune (HK cents) | Semi-Annually around Jul and Jan period. |
| FrasersComm | Semi-Annually around Oct and Apr period. |
| FrasersCT | Quarterly |
| K-Reit | Semi-Annually around Jul and Jan period. |
| LippoMapleTrust | Quarterly |
| MapleTreeLog | Quarterly |
| PLife | Quarterly |
| Saizen | Semi-Annually around Jul and Jan period. |
| Starhill Gbl | Quarterly |
| Suntec | Quarterly |
Yield
Yield is the annualised DPU divided by the share price. Annualised DPU means how much DPU we can get for the whole year. The usual practice in calculation of annualised DPU is to take the latest DPU and mulitply by number of distributions per year, i.e. X 4 for quarterly distribution, X 2 for semi-annual distribution. So for the CMT example above the latest estimated annualised DPU = SGD 0.0235 X 4 = SGD 0.094, OR SGD 94 per lot. From the SGX portal, under "Prices, Indices, Statistics" -> "REITs", we find that the latest closing price of CMT (on 13 Nov 2009) is 1.68. So the latest yield for CMT = 0.094/1.68 = 5.595%.
Of course there are variations to the way in calculating yield. For a REIT giving a stable and consistent amount of DPU, the above method should be accurate. For a REIT with widely varying DPU every distribution, you may add up all the distributions per year, or half a year than multipy by 2, to get a more accurate estimate of the annualized DPU. From observation, the DPU of SREIT is fairly stable, with very little % variable QoQ, other than when there is a rights issue in which the DPU is diluted, or when a troubled REIT temporarily cuts the DPU.
Distributable Income
The DPU is derived from the distributable income of a REIT. The distributable income is how much cash the REIT is able to distribute. Now there is a subtle difference between the REIT and a normal company in terms of dividend payment. For a normal company, it may pay out a certain percentage of its net profit as dividend. But net profit may not consist of purely cash earnings, as some earnings that are posted as profit may not be cash income, example increase in valuation of a property. Similarly, decrease in valuation of a property may be posted as a loss in the calculation of net profit, but it does not mean a loss of cash. For REITs, the distributable income is derived from its cash earnings, so technically it is possible for a REIT to post a net loss when the decrease in valuation of its properties is much more than the rental income, and yet it is still able to have a postive distributable income.
The distributable income statement can be determined from the quartly earnings report of the REIT. You can get the quarterly report from the SGX portal, under "Listed Companies" -> "Company Announcements". Select "Last 3 Months" for the Announcement Period, and say for example "CapitaMall Trust" for the Company Name. Look out for something along the line of "MISCELLANEOUS :: 2009 THIRD QUARTER UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT".
Once you get hold of the report, look for the "Statement of Total Return & Distribution Statement". The Distribution Statement will tell you how much cash is available for distribution (Amount available for distribution to Unitholders), and how much cash is actually paid out for that quarter (Distributable income to Unitholders). The Distributable income to Unitholders divided by the total number of units/shares of the REIT will give you the DPU. The total number of units in issue by the REIT can be found out in the same report. Look for Total issued and issuable Units as at end of period under Details of any change in the issued and issuable Units.
By MAS regulation, a REIT is supposed to give out at least 90% of its amount available for distribution to Unitholders. Currently most of the REITs are giving out 100%, and as far as I know CDL HTrust has cut its distribution to 90% since early this year.
Related Posts
- All about REIT - The Basics Part 2: More about Yield
- Other articles from All about REIT
- DPU Information Page
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