REITs share price had been falling recently. This is due to the rising 10 year treasury yield to 4.58%. In addition, the recent REITs results have been disappointing with a number of REITs having seen their DPU fall.
With interest rates expected to remain elevated, REITs share price will continue to remain depressed and might see continued falling DPU. Hence, investors need to be very selective in they REITs they invest.
Most investors will filter out potential bargains by looking at REITs that are trading at their 52-week lows. However, this may not be a reliable way to invest in those REITs.
In this article, we feature 3 REITs trading at 52 week lows and see whether they should be added in your watchlist.
CapitaLand India Trust
CapitaLand India Trust (CLINT) reported net property income increase by 18% to S$49.4 million in the 1Q FY 2024 business update. This is due to higher rental income from existing properties and income contributions from acquisition and development.
Total committed occupancy is up from 88% to 94% while 71% of its borrowings are on fixed rates. Gearing ratio is at 37.0% while cost of debt is at 6.3%. CLINT share price has dropped 8.04% year to date and is trading near its 52 week low of 95 cents.
With the drop in share price, the distribution yield is now at 6.2%. This is definitely not attractive as CLINT usually trades at 7% yield. You can view the REIT website here.
Ireit Global
In its latest business update ended 31 March 2024, Ireit reported slight increase in portfolio occupancy to 91.5% with weighted average lease expiry of 4.9 years.
Gearing ratio is at 37.0% with weighted average interest rate of 1.9%. Rental reversion is a positive 11.1% year to date with interest coverage ratio of 7.1x.
The REIT manager expects 2024 performance is likely to benefit from positive rental escalations, end of rent-free periods granted to tenants within IREIT’s portfolio and full-year contribution from B&M Portfolio.
Ireit Global’s full year 2023 DPU dropped 30.5% to 1.87 Euro cents mainly due to the enlarged units as a result of the preferential offering. Ireit Global share price has fallen 18.29% year to date with and is now trading near its 52 week low of 32 cents.
Ireit Global’s DPU has been falling since 2019. This is due to the slowing European economy and that SGD has been rising against the Euro. Hence, even though at current share price, the yield is more than 8%, this REIT is definitely not reliable REIT for income investors.
You can view the REIT website here.Â
Suntec Real Estate Investment Trust
In its latest business update for the first quarter 2024, Suntec Real Estate Investment Trust (Suntec REIT) reported net property income dropped 3.8% to S$73.4 million.
This is due to lower contribution from 55 Currie Street (Adelaide), 177 Pacific Highway (Sydney) and lower contribution from The Minster Building (London).
DPU dropped 13% to 1.511 cents. This is due to the completion of capital distribution ($5.8m), higher financing cost ($2.4m) and vacancies at 55 Currie Street, Southgate Complex and The Minster Building.
Suntec REIT gearing ratio is at 42.3% with adjusted interest coverage ratio at 2.0x. This poses a red flag for the REIT as it might result in fund raising exercise which will impact the DPU and further dilute shareholders’ value.
Suntec REIT share price has fallen 13.82% year to date and the share price is near its 52 week low of S$1.03.
However, Suntec REIT DPU is not growing and together with a high gearing ratio and low interest coverage ratio, Suntec REIT could be one of the unreliable REITs you should avoid. You can view the REIT website here.
Conclusion
The abovementioned are the 3 REITs Trading at 52 Week Lows. Although, the share price of these 3 REITs are currently trading at 52 week lows, they are definitely not a great buy. In fact, these 3 REITs could prove unreliable for income investors.
