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These 3 REITs Have Delivered A Mixed Performance In Their Latest Earnings

We’re in the earnings season again! Many of the real estate investment trusts in Singapore’s stock market have released their latest results. Some showed growth, some had mixed numbers, while some delivered a weaker financial performance.

In this article, let’s look at three REITs that belong to the second group:

1. We start with CDL Hospitality Trusts (SGX: J85), which released its results for the quarter and year ended 31 December 2016 last week.

As a quick introduction, CDL Hospitality Trusts is a stapled trust that consists of a real estate investment trust and business trust. It has a focus on hospitality assets and currently owns a total of 15 hotels and two resorts. These properties have 4,911 rooms in all and are spread over Singapore, Australia, Japan, New Zealand, the United Kingdom, and Maldives.

During the reporting quarter, CDL Hospitality Trusts’ gross revenue and net property income declined by 3.6% and 0.3%, respectively, compared to a year ago. But, its distribution per stapled security stepped up by 3.3% year-on-year.

The trust also experienced declines in its average occupancy rate, average daily rate, and revenue per available room for its Singapore portfolio.

Nearly half of CDL Hospitality Trusts’ revenue in 2016 was sourced from Singapore. During the year, tourist arrivals had increased, but so did the supply of hotel rooms. The trust’s overall performance was affected by the weak performance from its properties in Singapore, but were mitigated by its “diversification strategy implemented in the past few years.”

CDL Hospitality Trusts expects room rates in Singapore to remain competitive.

2. The next REIT on the list is Frasers Commercial Trust (SGX: ND8U).

The trust has ownership stakes in six commercial properties located in Singapore and Australia.

Frasers Commercial Trust released its latest results, for the quarter ended 31 December 2016, last week. The REIT’s gross revenue for the quarter inched up by 0.1% year-on-year, but its net property income (NPI) had dipped by 0.6%. The distribution per unit was unchanged.

Frasers Commercial Trust ended its reporting quarter with a portfolio occupancy rate of 93%, a marginal improvement from the 92.9% seen a year ago.

The trust commented that the “stability and diversification” of its portfolio had improved because of the August 2015 acquisition of 357 Collins Street. The Australian property is currently fully occupied and has no leases expiring until the REIT’s FY18 (fiscal year ending 30 September 2018).

Looking ahead, the REIT anticipates market conditions to remain challenging overall.

3. Suntec Real Estate Investment Trust (SGX: T82U) rounds up the trio here. It released its results for the quarter and year ended 31 December 2016 last week.

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 has a heavier weighting in Singapore, includes Suntec City, One Raffles Quay, Park Mall, Marina Bay Financial Centre, and two commercial buildings in Australia.

In the fourth quarter of 2016, Suntec REIT reported a 2.9% year-on-year decline in net property income despite enjoying a 1.6% increase in gross revenue. The REIT’s distribution per unit also fell by 5.6% in the reporting quarter on the back of the partial sale of Park Mall.

Meanwhile, both the REIT’s office and retail portfolio occupancy rates at end-2016 had declined marginally compared to end-2015. The former had slid from 99.3% to 98.6% while the latter had inched down from 97.9% to 97.7%

Suntec REIT also expects the performance of both its office and retail portfolio to “remain stable.”

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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.