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These 2 REITs Have Delivered Growth In Their Latest Earnings

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

In this article, let’s look at two REITs that achieved growth in their latest earnings:

1. Parkway Life REIT’s (SGX: C2PU) latest earnings report – for the quarter and year ended 31 December 2016 – was released two weeks ago.

The REIT is one of the largest listed healthcare real estate investment trusts in Asia by asset size. Its portfolio consists of 44 healthcare-related properties that are located in Singapore, Japan, and Malaysia.

In Singapore, Parkway Life REIT owns three private hospitals, namely, Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital. In Malaysia, the REIT has ownership of strata-titled units/lots in Gleneagles Intan Medical Centre. The remaining 40 properties are in Japan and they are mostly nursing homes and care facilities.

Despite the sheer number of properties in Japan, 64% of Parkway Life REIT’s current portfolio value of S$1.657 billion comes from its three Singapore hospitals.

During the fourth quarter of 2016, Parkway Life REIT’s gross revenue grew 5.4% year-on-year to S$27.7 million while net property income increased by 4% to S$25.6 million.

On the surface, the REIT’s distribution per unit (DPU) appeared to have taken a huge blow with a 9.2% fall from a year ago to 3.06 cents. But, Parkway Life REIT had enjoyed a one-off gain in the fourth quarter of 2015; if that was backed away, the REIT would have reported growth of 2.2% in its 2016 fourth quarter DPU.

Commenting on its outlook, Parkway Life REIT said that “the long-term prospects of the regional healthcare industry continue to be driven by rising demand for better quality private healthcare services given the fast-ageing populations.”

But, the REIT added that it “expects challenges in acquisition opportunities [in the short to medium term] given the market volatility.”

2. Next up we have Ascendas Real Estate Investment Trust (SGX: A17U), which owns 102 properties in Singapore and 28 properties in Australia. These properties are used for either commercial or industrial purposes, or both.

The REIT’s latest results was released two weeks ago as well. For the quarter ended 31 December 2016, Ascendas REIT’s gross revenue improved by 7.6% to S$208.6 million compared to the same quarter a year ago. This drove a 9% increase in net property income to S$155.0 million, which ultimately resulted in a 1.2% year-on-year increase in the distribution per unit to 3.993 cents.

During the reporting quarter, Ascendas REIT also saw its overall occupancy rate improve from 89.2% a year ago to 90.2%.

In its earnings release, Ascendas REIT commented that its business environment is expected to be challenging. Moreover, new supply of industrial space in Singapore in 2017 “will put further pressure on occupancy and rental rates.” But the REIT had made acquisitions recently and it thinks that the acquisitions “will broaden and strengthen [its] resilience.”

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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.