REITs’ results have been pouring in this past week (Jan 24-28). Among the top performers in distribution per unit (DPU) growth was Suntec REIT. In FY2021, its DPU grew 17% y-o-y to 8.666 cents, giving the REIT a DPU yield of 5.55%. As at Dec 31, 2021, Suntec REIT’s net asset value (NAV) stood at $2.11, translating into a P/NAV of 0.7 times.
We have added the percentage of fixed date, and term to maturity, in our S-REIT table as markets prepare for rate hikes by the US Federal Reserve. REITs with no refinancing in 2022 (there are a few), a high portion of fixed rates, and long term to maturity have lower risk of being impacted by rate hikes.
Of course, rents, leasing strategy, quality of assets, and the way properties and portfolios are managed are important metrics that affect rental income. For S-REITs, interest expense is arguably the largest expense item, and more impactful than fees — which usually get a bit more attention. Sometimes, capital management and sponsor support can make a difference to valuations.
