Opting to pay fees in partial cash a good move for this REIT

SINGAPORE (April 11): DBS is maintaining its “buy” call on SPH REIT with a higher target price of $1.04 after the REIT manager has elected to pay 40% of base management fees in 3Q17 in cash.

(See also: SPH REIT 2Q DPU flat at 1.40 cents)

“We factored in future fees payable in cash in our model. We believe this decision will be favourable to unitholders as the dilutive impact is now less,” says analyst Derek Tan in a Tuesday report, who says investors are now looking at a dividend yield of at least close to 6% and upside potential of 6%.

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