Be alert to Reits using leverage and paying fees in units to prop up distribution per unit

NUMEROUS Singapore-listed real estate investment trusts (Reits) posted growth in distribution per unit (DPU) from a year ago for the latest quarter or half-year ended June 2022. Some trusts are benefiting from Singapore’s opening up amid living with Covid.

DPU matters greatly to many Reit investors - typically, this is money that is paid out to the investors. For retirees, receiving recurring distribution income from Reits, which may grow over time, is very useful, especially with rising inflation.

Still, many Reit managers expressed caution on the path ahead. Several managers were at pains to highlight efforts made to manage their borrowings amid rising interest rates, such as having a high proportion of fixed rate debt, a long average debt maturity and well-spread out debt maturities.