Latest Earning Season – Three REITS That Have Delivered Mixed Performances

In a low interest and increasing challenging economic environment, REITs can be particularly attractive due to their relatively predictable earning powers.

Despite their traditionally stability, not all REITs have manage to defend their earning power in the latest earnings season.

REITs like Sabana Shariah Compliant REIT (SGX: M1GU), Starhill Global Real Estate Investment Trust (SGX: P40U) and OUE Hospitality Trust (SGX: SK7) have delivered weaker quarterly performance.

On the other hand, we have seen a strong performance from the likes of CDL Hospitality Trusts (SGX: J85), Mapletree Commercial Trust (SGX: N2IU) and Viva Industrial Trust (SGX: T8B).

Yet, there is third group – the mixed bags. These are the REITs that cannot be categorised in the above two groups. Here, are three of them.

Manulife US Real Estate Investment Trust (SGX: BTOU) is one of the latest REITs that reported mixed results. Manulife US REIT is a Singapore-listed REIT that focusses on commercial buildings in the US. The REIT has three properties in its portfolio right now. The properties are located in Los Angeles, Atlanta, and Irvine, Orange County.

As a quick summary, the REIT reported mixed results, whereby revenue was lower, whilst net property income and distribution per unit were higher, compared to forecasts. Total portfolio occupancy for Manulife US REIT came in at 97%. The REIT’s portfolio occupancy had also increased over the years, rising from 91.5% in 2011.

Financially, gross revenue came in lower by 1.1%, whilst net property income (NPI) increased 1.5%, compared to forecast. Another positive is that distribution per unit (DPU) came in at 2.01 cents, 5.8% higher than the REIT’s forecast.

For more information about the latest result, please read this article.

Frasers Hospitality Trust (SGX: ACV) is a stapled trust that comprises a real estate investment trust and business trust. It bills itself as the first trust in Singapore’s stock market that focusses on hotels and serviced residences around the world.

Its portfolio consists of 16 properties located across nine cities in Asia, Australia, and Europe.

According to this article, gross revenue, net property income, and distributable income all grew for the full 2016 financial year due to Frasers Hospitality Trust’s acquisitions of Sofitel Sydney Wentworth and Maritim Hotel Dresden, as well as growth from the other Sydney properties and ANA Crowne Plaza Kobe.

Nevertheless, the growth has not translated into the distribution per stapled security (DPS). This was due to a rights issue announced on 9 September 2016 that had enlarged the trust’s securities count.

Financially, gross revenue for the full year rose by 17.1% and net property income (NPI) improved by 20.6% as compared to 2015. Yet, distribution per stapled security (DPS) came in at 5.23 cents, down by 10.1% from a year ago.

Suntec Real Estate Investment Trust (SGX: T82U) announced its third quarter results a few weeks ago.

Suntec REIT is one of the largest REITs in Singapore and currently has interests in retail malls and offices in Singapore and Australia.

Its portfolio, which is concentrated in Singapore includes Suntec City, One Raffles Quay, Park Mall and a commercial building in Australia

The REIT reported that both the retail and office markets continued to face challenges in the third quarter, resulting in a weaker revenue and net property income. Yet, despite the weaker revenue, both the office and retail portfolio maintained strong occupancy rates of 99.3% and 97.3% respectively. In the same quarter a year ago, both rates were at 98.9% and 96.5%, respectively.

Gross revenues declined by 4.3% and net property income (NPI) decreased by 2.1% year-on-year. Despite the lower revenue and net property income, distributions per unit (DPU) improved by 0.5% from 2.522 cents to 2.535 cents.

For more information about the latest quarterly result, click here.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.