That said, a DPU decline isn’t concerning in cases like stock splits or bonus share issuances, as unitholders are proportionally entitled, leaving the total dividend received unchanged. Conversely, a DPU increase resulting from a reverse stock split isn’t necessarily worth celebrating, as it doesn’t reflect actual growth.
Another key consideration is the manager's management fees. While DPU growth is critical, understanding how it compares to the fees charged by the REIT manager provides an additional perspective on how efficiently the REIT manager creates value for unitholders.
This post looks at the relationship between management fees, DPU, and DPU from operations over the past 10 years. Please note that this post is for informational purposes only and does not constitute a recommendation or opinion on specific REITs.
Data Notes:
- Performance fees, trustee-manager fees (for hospitality trusts), and overseas asset management fees (if disclosed) are included.
- Advanced distributions are excluded.
- Indicative DPUs from business updates (which may be manually calculated) are included.
- Only full-year data is used. For REITs listed for less than 10 years, partial-year data is excluded (e.g., if listed for 4.5 years, only the 4 latest full years are plotted).
- Maiden DPU figures are adjusted to 3-month or 6-month bases, depending on DPU reporting frequency.
- DPU adjustments for reverse stock splits (Cromwell European REIT) and bonus share issuances (Prime US REIT) are applied.
- Management fees for 3Q 2024 (calendar) are estimated for REITs with DPU but without management fees figures presented in business updates.
- All data is compiled on a best-effort basis, without guarantees of accuracy or reliability.
Chart Breakdown:
- Management Fees vs DPU and DPU from Operations: This chart illustrates how management fees compare to DPU metrics. For more details about DPU from operations, refer to my previous post: Understanding REIT Distribution Components and DPU from Operations.
- DPU & DPU from Operations / Manager's Management Fees Index. These indices divide DPU and DPU from Operations by the management fees, with the initial year set as a base of 1.00.
- If DPU grows in proportion to fees, the index stays at 1.
- If DPU decreases while fees stay the same, the index declines, and vice versa.
- Similarly, if DPU stays flat while fees increase, the index decreases, and vice versa.
- Declining Index: REIT A’s DPU/Fees Index starts at 1.0 but drops to 0.5 over 10 years. Initially, you received 1 cent in DPU for every dollar of fees charged by the manager. Now, you only receive 0.5 cents per dollar. This could result from:
- DPU increasing, but fees increasing more
- DPU decreasing, but fees decreasing less or staying the same
- DPU staying constant, but fees increasing
- Rising Index: REIT B’s DPU/Fees Index rises from 1.0 to 1.2. You used to receive 1 cent per dollar of fees but now receive 1.2 cents. This could result from:
- DPU increasing, but fees increasing less or staying the same
- DPU decreasing, but fees decreasing more
- DPU staying constant, but fees decreasing
- Stable Index: REIT C’s DPU/Fees Index remains at 1.0 throughout 10 years. This indicates:
- DPU and fees both remained constant
- DPU and fees increased proportionally
- DPU and fees decreased proportionally
CAGR for DPU/Fees Indices:
- 4 REITs have a CAGR of -100% due to DPU being halted over the past year.
- 4 REITs have less than 5 years of data available: Daiwa House Logistics Trust, Digital Core REIT, Elite Commercial Trust, and United Hampshire US REIT.
- 6 REITs underwent mergers in the past decade: CapitaLand Ascott Trust, CapitaLand Integrated Commercial Trust, ESR-REIT, Frasers Logistics & Commercial Trust, Mapletree Pan Asia Commercial Trust, and OUE REIT.
- Acrophyte Hospitality Trust has a high CAGR - DPU from Ops/Fees index due to its low DPU from Ops as a base reference in the first full year (4Q 2019 to 3Q 2020).
Final Thought:
For more information, check out:
SREITs Dashboard - Detailed information on individual Singapore REIT
SREITs Data - Overview and details of Singapore REIT
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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.
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