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These 2 REITS Have Delivered Growth In Their Latest Quarterly 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. First Real Estate Investment Trust (SGX: AW9U) released its latest earnings in the middle of January.

In the quarter ended 31 December 2016, First REIT’s gross revenue increased by 5.1% year-on-year while net property income grew by 5.2%. These led to the REIT’s distribution per unit growing by 1.9%.

As a quick introduction, First REIT is a healthcare-focused real estate investment trust. It currently has a portfolio of 18 properties (14 in Indonesia, three in Singapore, and one in South Korea) that are mostly healthcare-related facilities. The REIT’s sponsor is Indonesia’s largest listed property company, PT Lippo Karawaci Tbk.

In December 2016, First REIT completed its acquisition of the Siloam Hospitals Labuan Bajo for S$20 million. Lippo Karawachi still has over 40 hospitals in its development pipeline which could potentially be acquired by First REIT in the future.

First REIT commented in its earnings release that annual healthcare expenditure in Indonesia is expected to increase to US$50 billion in 2020. The REIT also thinks that it can benefit from the full implementation of a national health insurance scheme covering 260 million Indonesians by 2019.

2. CapitaLand Commercial Trust (SGX: C61U) also released its latest results in the middle of January.

As a quick background CapitaLand Commercial Trust is managed by CapitaLand Limited (SGX: C31) and it is one of the largest commercial real estate investment trusts (REITs) in Singapore.

The REIT has a minority stake in Quill Capita Trust in Malaysia, but other than that, its portfolio consists of commercial buildings in Singapore. Some of CapitaLand Commercial Trust’s properties are Capital Tower, Six Battery Road, and Raffles City Singapore.

During the quarter ended 31 December 2016, the REIT experienced a 32.7% jump in revenue and a 35.4% spike in net property income. Consequently, CapitaLand Commercial Trust’s distribution per unit (DPU) climbed by 10.1%.

In its earnings release, CapitaLand Commercial Trust acknowledged that its market conditions are challenging. But, it is “looking at the next wave of the office market upcycle as well as “the future of work” – that is, how the way people work will possibly evolve in the future given the trend of globalisation, mobility and digital technology – and incorporate that in [its] evaluation of the financial feasibility of the redevelopment of Golden Shoe Car Park, while seeking approvals from the government authorities.”

Golden Shoe Car Park is a property in CapitaLand Commercial Trust’s portfolio and the REIT will be redeveloping the building. The REIT wishes to “replicate the success of CapitaGreen so as to spark a new growth catalyst” for itself with the redevelopment.

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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.