- Arena REIT, focussed on social infrastructure properties across Australia, has announced a dividend of 6.85 cents per stapled security for six months ending 30 June 2020.
- Australia’s largest domestic pure play industrial REIT, CIP added to S&P/ASX 200 index, as S&P DJI announced June 2020 Quarterly Rebalance update.
- CIP, well placed with a strong balance sheet and diverse income streams, has declared 4.675 cents per unit of dividend for the quarter ending 30 June 2020.
Real Estate Investment Trusts (REITs) are companies that own a diversified and professionally managed portfolio of real estate assets, providing investors with exposure to a whole property portfolio including commercial, industrial, retail and other real estate assets that would otherwise be difficult for an individual investor to gain access to or buy. These assets may include hotels, resorts, self-storage facilities, warehouses, office buildings, etc.
With the ongoing situation and economic slowdown due to coronavirus (COVID-19) pandemic, interest rates are at historic lows, and during such times, investors turn defensive and only prefer to add safe financial instruments other than term deposits or bonds.
One alternative is REITs. While several companies are now a days cancelling or deferring dividends to preserve cash at the background of an uncertain operating landscape, REITs like Arena and Centuria Industrial are paying out dividends.
In addition to providing exposure to wide-ranging large-scale, income-producing real estate assets, REITs offer liquidity, stable yield, and potential for capital growth over long term.
Let us cast an eye on the following ASX-listed Real Estate Investment Trusts that have recently declared dividends.
Arena REIT (ASX: ARF)
Arena REIT is a property group listed on the Australian Securities Exchange in the S&P/ASX300 Index. It is engaged in the development, management and ownership of social infrastructure properties across Australia. The Group has leased its existing social infrastructure property portfolio to a diversified tenant base mainly in the growing sectors of childcare and healthcare.
Dividend Distribution: On 19 June 2020, Arena REIT announced a dividend of 6.85 cents per stapled security for the six months to 30 June 2020, in accordance with the upper range of its previously announced FY20 distribution guidance of 13.9 cents to 14.0 cents per security.
Also, the Dividend and Distribution Reinvestment Plan (DRP) of the Group would be based on this distribution and new securities priced at a 1.5% discount to the 10-day volume weighted average price (VWAP) would be issued to the securityholders participating in the DRP during the Pricing Period.
Key dates in relation to the distribution are as follows:
Institutional Placement: On 3 June 2020, Arena REIT Group announced to have successfully completed the fully underwritten Institutional Placement announced to the ASX on Tuesday, 2 June 2020. A strong level of support was received from existing securityholders as well as potential new investors, which resulted in the Company increasing the size of Institutional Placement from $ 50 million to $ 60 million.
The Institutional Placement was executed at a price of $ 2.28 per security, representing a 7.3% discount to the 5-day VWAP to 1 June 2020 of $ 2.4594 per security and a 5.0% discount to the closing price of $ 2.40 per security on 1 June 2020. Around 26.3 million new securities would be issued to participating institutional investors.
Security Purchase Plan: The Group also unveiled a non-underwritten security purchase plan for eligible securityholders, targeted towards raising up to $ 10 million. The issue price of securities would be $ 2.2115 per security, with issue date of 1 July 2020.
Proceeds from the institutional placement and security purchase plan would enable the Group to pursue further investments in the social infrastructure property space.
With a market capitalisation of $ 778.92 million, the ARF stock was trading on 23 June 2020 (AEST 01:40 PM) at $ 2.370, down 0.42%.
Centuria Industrial REIT (ASX:CIP)
Centuria Industrial REIT is Australia’s largest domestic pure play industrial REIT, underpinned by a quality and diverse tenant base. CIP has a strong balance sheet and diverse income streams from customers in defensive sectors across a portfolio of 49 high quality industrial and logistics assets.
S&P/ASX200 Index Inclusion: The REIT was set for inclusion in the S&P/ASX 200 Index from 22 June 2020, informed Centuria Property Funds No. 2 Limited, the responsible entity of CIP, as announced by the S&P Dow Jones Indices, on 12 June 2020. Inclusion in the S&P/ASX 200 index is expected to provide opportunities for increased liquidity to existing unitholders while continuing to broaden CIP’s unitholder base.
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CIP Fund Manager, Jesse Curtis, commented, “CIP has been under Centuria’s active management since January 2017. During this time, CIP has established itself as Australia’s largest domestic pure play industrial REIT with 49 high-quality assets valued at $1.6 billion, located in last-mile and infill locations across major industrial markets.”
He added that CIP is well-positioned to generate reliable and predictable income streams that support distributions for its unitholders.
Distribution Declaration: On 19 June 2020, CIP confirmed that it would be paying out distribution of 4.675 cents per unit for the quarter ending 30 June 2020, which is consistent with the FY20 distribution guidance.
The total distributions declared during the financial year ending 30 June 2020 (FY19-20) is consistent with the FY20 distribution guidance announced in August 2019. Also, the REIT’s Distribution Reinvestment Plan (DRP) would be activated for the June 2020 quarter distribution.
Q3 FY20 Fund Update: Centuria Industrial REIT provided its update for Q3 FY20, reporting the following:
- Portfolio is 96.4% occupied with a WALE of 6.9 years, as at 31 March 2020.
- More than 66% of portfolio leases expire at or beyond FY24.
- Resilient and defensive tenant customers with 54% of portfolio income derived from tenant customers directly linked to the production, packaging and distribution of consumer staples and pharmaceuticals.
- Current gearing of 35.5%, at the midpoint of the target range of 30%-40%; current loan to value ratio of 38.2%, against a covenant of 55.0%; and current interest cover ratio of 4.8 times, against a covenant of 2.0x.
- Around $ 80 million of undrawn debt headroom, as at 31 March 2020.
With a market capitalisation of $ 1.36 billion, the CIP stock was trading on 23 June 2020 (AEST 01:41 PM) at $ 3.350, down 1.76%.
(Please note that currency mentioned is in AUD, unless otherwise specified)