Often for growth profile of REITs, we look at both DPU growth and NAV growth, but are there any other metrics growth that we could look into from Basic Financial Metrics of REITs and Uncommon Financial Metrics of REITs ? Today, let's try to explore this.
1) DPU Growth
REITs could increase its DPU through organic growth or inorganic growth. Organic growth means growth without acquisition of properties, could be through positive rental reversion, increase occupancy, increase REVPAU, AEI (Asset Enhancement Initiative), etc. Inorganic growth is growth either through acquisition or development of properties. Below is list of top 5 REITs that have most DPU growth in past 5 years or since IPO:
* Exclude those less than 2 years since listing.
For more on DPU growth, you could read the below:
1) Probutterfly - REIT Placements and Rights Issue – Yield Accretive vs DPU Accretive
2) The Babylonians - How do REITs grow their business? (Organic Growth)
3) The Babylonians - How do REITs grow their business? (Inorganic Growth)
2) NAV per Unit Growth
Generally, if a REIT is able to have DPU growth, then its NAV per unit would grow as well. However, there are a few exceptional cases where EC World REIT has DPU growth but NAV per unit drop; BHG Retail REIT and Keppel REIT both have DPU decrease over time but NAV per unit slightly increase. I am quite puzzled for this, appreciate if anyone could share their view on this.
Note that it is important to take the NAV value as per the trading currency to account for any foreign exchange effect. 2 REITs to take note for this matter are IREIT Global and Frasers Logistics and Industrial Trust. Below is list of top 5 REITs that have most NAV per unit growth within past 5 years or since IPO:
* Exclude those less than 2 years since listing.
Do you notice both top 5 DPU growth and NAV growth are same REITs ?
We all know that for financial metrics like interest cover ratio, property yield, distribution over capital and distribution over gross revenue, the higher value the better. However, besides looking at current value, it is also important to look at past growth information of these financial metrics.
3) Interest Cover Ratio Growth (from Debt Profile of REITs)
Top 5 REITs that have highest interest cover ratio growth within past 5 years or since IPO:
* Exclude those less than 2 years since listing.
4) Property Yield Growth (from Basic Financial Metrics of REITs)
Top 5 REITs that have highest property yield growth within past 5 years or since IPO:
* Exclude those less than 2 years since listing.
5) Distribution over Capital Growth (from Uncommon Financial Metrics of REITs)
Top 5 REITs that have highest distribution over capital growth within past 5 years or since IPO:
* Exclude those less than 2 years since listing.
6) Distribution Margin Growth (from Uncommon Financial Metrics of REITs)
Top 5 REITs that have highest distribution margin growth within past 5 years or since IPO:
* Exclude those less than 2 years since listing.
What if a REIT has high financial metrics value but decreasing over time ? Is is better than a REIT with low value but increasing overtime ? In another words, do you choose a good REIT with its fundamental deteriorating slowly or do you bet on a poor fundamental REIT which shows sign of growth ? It is a tough choice isn't it ?
REITs could increase its DPU through organic growth or inorganic growth. Organic growth means growth without acquisition of properties, could be through positive rental reversion, increase occupancy, increase REVPAU, AEI (Asset Enhancement Initiative), etc. Inorganic growth is growth either through acquisition or development of properties. Below is list of top 5 REITs that have most DPU growth in past 5 years or since IPO:
Top 5 DPU Growth
|
|
Name
|
Approx. Value
|
Ascendas India Trust
|
52%
|
Fortune REIT
|
23%
|
Ascendas Hospitality Trust
|
19%
|
Mapletree North Asia Commercial Trust
|
19%
|
Mapletree Industrial Trust
|
17%
|
For more on DPU growth, you could read the below:
1) Probutterfly - REIT Placements and Rights Issue – Yield Accretive vs DPU Accretive
2) The Babylonians - How do REITs grow their business? (Organic Growth)
3) The Babylonians - How do REITs grow their business? (Inorganic Growth)
2) NAV per Unit Growth
Generally, if a REIT is able to have DPU growth, then its NAV per unit would grow as well. However, there are a few exceptional cases where EC World REIT has DPU growth but NAV per unit drop; BHG Retail REIT and Keppel REIT both have DPU decrease over time but NAV per unit slightly increase. I am quite puzzled for this, appreciate if anyone could share their view on this.
Note that it is important to take the NAV value as per the trading currency to account for any foreign exchange effect. 2 REITs to take note for this matter are IREIT Global and Frasers Logistics and Industrial Trust. Below is list of top 5 REITs that have most NAV per unit growth within past 5 years or since IPO:
Top 5 NAV Growth
|
|
Name
|
Approx. Value
|
Fortune REIT
|
50%
|
Ascendas India Trust
|
43%
|
Ascendas Hospitality Trust
|
27%
|
Mapletree Commercial Trust
|
27%
|
Mapletree North Asia Commercial Trust
|
24%
|
Do you notice both top 5 DPU growth and NAV growth are same REITs ?
 |
| Now, let's explore other growth indicators besides DPU and NAV |
3) Interest Cover Ratio Growth (from Debt Profile of REITs)
Top 5 Interest Cover Ratio
Growth
|
|
Name
|
Approx. Value
|
Parkway Life REIT
|
28%
|
Keppel DC REIT
|
27%
|
Ascendas Hospitality Trust
|
25%
|
Fortune REIT
|
19%
|
Capitaland Mall Trust
|
18%
|
4) Property Yield Growth (from Basic Financial Metrics of REITs)
Top 5 REITs that have highest property yield growth within past 5 years or since IPO:
Top 5 Property Yield
Growth
|
|
Name
|
Approx. Value
|
BHG Retail REIT
|
10%
|
Lippo Mall Indonesia Retail Trust
|
9%
|
Suntec REIT
|
5%
|
Soilbuild Business Space REIT
|
3%
|
First REIT
|
2%
|
5) Distribution over Capital Growth (from Uncommon Financial Metrics of REITs)
Top 5 REITs that have highest distribution over capital growth within past 5 years or since IPO:
Top 5 Distribution over
Capital Growth
|
|
Name
|
Approx. Value
|
Frasers Commercial Trust
|
18%
|
Suntec REIT
|
5%
|
BHG Retail REIT
|
2%
|
AIMS AMP Capital Industrial Trust
|
2%
|
Ascendas Hospitality Trust
|
1%
|
6) Distribution Margin Growth (from Uncommon Financial Metrics of REITs)
Top 5 REITs that have highest distribution margin growth within past 5 years or since IPO:
Top 5 Distribution Margin
Growth
|
|
Name
|
Approx. Value
|
Ascendas Hospitality Trust
|
40%
|
Frasers Commercial Trust
|
31%
|
Ascendas India Trust
|
14%
|
Capitaland Retail China Trust
|
11%
|
Keppel REIT
|
9%
|
 |
| Investing is always a choice |
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