Outstanding Shares of REITs

If you are a REITs investor, you would notice that almost all REIT outstanding shares increase over time. The common contributor to this increase is due to payment of fees in units instead of cash, this is usually in small volume. Share placement by either private placement, preferential offer or rights issue is another major contributor to share increase in which usually involve big volume. There are also other contributors like scrip dividend and convertible shares.

Management fee is paid in units is dilutive, reason being outstanding share increase is permanent while quarter DPU increase is temporary. A simple way to explain the effect is that the REITs need to earn more in next quarter to maintain the same DPU. The situation is worse if the REIT manager receive shares in one hand and sell it at the other hand. Below is list that REIT manager which received fee in units and sold almost same amount of units in year 2018:
i) Aims AMP Capital Industrial REIT
ii) Ascendas Hospitality Trust
iii) Cache Logistics Trust
iv) Frasers Hospitality Trust
v) IREIT Global
vi) Soilbuild Business Space REIT
vii) Suntec REIT

REIT managers could have just buy shares from open market if they like more shares in REITs

One way to quantify this share increase is through classification of the type of share increase. For me, I consider any share increase that retail investors couldn't participate as dilutive. This include any fee paid in units, private placement and convertible shares. Below is list of top 5 REITs that increase most and lease dilutive share within past 5 years or since IPO, whichever is longer, exclude those less than 2 years since listing.

Most Dilutive Share Increase		Least Dilutive Share Increase
Name	Approx. Value	Name	Approx. Value
OUE Commercial Trust	35.5%	Parkway Life	0%
Manulife US REIT	35%	Starhill Global REIT	1.3%
Frasers Logistics & Industrial Trust	31%	Dasin Retail Trust*	1.5%
Frasers Commercial Trust	27.5%	EC World REIT	1.9%
Ascendas REIT	27%	BHG Retail REIT	2.25%

* Dasin Retail Trust is Business Trust

Those high increase is due to private placement. Although retail investor could not participate in private placement, but it is not necessary a bad thing IF REIT manager is able to do it without diluting DPU. One example would be raise fund for accretive acquisition. You could read more about private placement, from The Motley Fool:
i) What You Need To Know About Private Placements
ii) Why You Should be Wary of Private Placements For REITs

Next, can we quantify % of management fee payable in unit against total management fee ? Well, it works for most REITs, but not Capitaland Mall Trust. For Capitaland Mall Trust, it pays its management fee in cash, but its joint venture RCS Trust pays management fee in units, refer below:

Extracted from Capitaland Mall Trust Financial Statement

Another important aspect of REIT outstanding share to observe is its manager shareholding. The more the manager own its REIT share, the likely its interest is align with shareholder. We could get this information from insider trade or substantial shareholder page under investor relation. For those REITs that do not disclose directly, we could check through SGX website with steps below:
1) In SGX page, select Securities -> Company Information -> Company Announcements
2) At Categories under Announcements, Select Disclosure of Interest/ Change in Interest
3) Select REIT name to filter
4) Search for keyword "Manager" then click and open the link
5) Open the attachments at bottom, you should see FORM 6.
6)  Look at the % of "Immediately after the transaction" total interest.

Below REITs which its manager own more than 5% share, as of December 2018:

Manager >= 5% Shareholding
Name	Approx. Value
Ascott Residence Trust	8.2%
Capitaland Retail China Trust	5.3%
CDL Hospitality Trusts	6.2%
First REIT	7.2%
Frasers Commercial Trust	11.7%
Lippo Mall Indonesia Retail Trust	7.2%

Below REITs that its manager own no share, as of December 2018
i) Aims AMP Capital Industrial REIT
ii) Ascendas Hospitality Trust
iii) Cache Logistics Trust
iv) Frasers Hospitality Trust
v) IREIT Global
vi) Keppel REIT
vii) Soilbuild Business Space REIT
viii) Suntec REIT

Besides Keppel REIT, do you notice above are those in which received fee in units and sold it ?

If you would like to study deeper, you could also look check the shareholding of sponsor and manager's director's shareholding in particular REIT. These information can be found in annual report. However, I find it difficult to check sponsor shareholding as sponsor may hold REIT share through indirect interest. As for manager's director's shareholding, you could check through SGX website as manager shareholding steps, but with keyword "director" and view FORM 1.

Besides outstanding shares, there are other area to look for when investing in REITs. You could check out REITs Investing page which consolidate all my posts regarding REITs. If you find any error in my data, kindly let me know.