Citicore Energy REIT [CREIT 2.52 0.4%; 181% avgVol] [link] declared a Q1/23 dividend of P0.047, payable on July 6 to shareholders of record as of June 9.
The dividend has an annualized yield of 7.46% based on the previous closing price, which is 6.8% larger than CREIT's pre-dividend annualized yield of 6.98%. The total amount of the dividend is P308 million, which is 106% of the P290 million in distributable income that CREIT reported for the quarter.
Relative to CREIT's IPO price, the dividend increased CREIT's total stock and dividend return to 9.22%, up from its pre-dividend total return of 7.37%. CREIT said that revenue from new leases signed to two projects in development helped boost its guaranteed lease income for the quarter.
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The total amount of distributable income for the quarter was roughly in-line with previous quarters, so it’s not clear the basis that CREIT used to declare this fatter dividend.
REITs are allowed to declare dividends that exceed the amount of per-share distributable income available from that quarter, the only limit being the sustainability of that kind of approach given the REIT’s forward-looking prospects, or other factors like retained earnings that have not yet been distributed to shareholders through dividends.
Here, I’d say it’s probably a combination of both: with CREIT benefitting from increased income from a few new leases, and retained earnings of over P410 million at the end of 2022, CREIT had the juice and (maybe?) the confidence to declare a dividend in excess of its distributable income. Shareholders have reason to smile today.
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