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2 REITs That Have Delivered Positive Performances Recently

Real estate investment trusts (REITs) can be a relatively safer investment as compared to stocks, given its defensive nature of stable income from properties investment.

Though there is no guarantee that REITs will always deliver good results, they tend to deliver on most occasions.

In this article, we will look at two REITs that have kept up with the expectations of delivering stable and positive returns.

First Real Estate Investment Trust (SGX: AW9U) is the first REIT on our list that has delivered commendable performance.

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.

As a whole, the trust delivered a solid performance with a positive result in all metrics – revenue, net property income and distribution per unit. The stronger performance was mainly driven by contribution from the recently acquired Siloam Hospitals Labuan Bajo and higher rental income from the existing properties.

Financially, quarterly gross revenue increased 3.3% while net property income (NPI) improved 3.2% compared to the same period last year. With that, the distribution per unit (DPU) came in higher at 2.14 cents as compared to 2.11 cents in the same period last year.

For more information about the latest quarterly summary, you can head here.

CapitaLand Commercial Trust (SGX: C61U) is the next on the list that has delivered better performance lately.

As a quick background, CapitaLand Commercial Trust is managed by CapitaLand Limited (SGX: C31) and is one of the largest commercial REITs in Singapore by market capitalization.

At the local front, the REIT has ownership of properties such as Capital Tower, Six Battery Road, and Bugis Village. It also has partial stakes in Raffles City Singapore and One George Street.

Ms Lynette Leong, Chief Executive Officer of the REIT’s manager, summarised the quarterly performance as follows:

“CCT delivered a strong set of results this quarter, underpinned by the continued strong performance of CapitaGreen. The Trust’s portfolio committed occupancy rate of 97.6% as at end June 2017 maintained its lead over the market occupancy rate of 94.1% despite oversupply conditions in the office market.

During the quarter, we announced the sales of One George Street and Wilkie Edge and are pleased to have achieved sale prices of 16.7% and 39.3% above the respective 31 December 2016 book values and at exit yields of 3.2% and 3.4% per annum respectively. Net proceeds from these two asset sales are expected to total approximately S$833 million, greatly enhancing CCT’s financial flexibility. …….”

At the financial front, quarterly revenue increased 29.5% while NPI improved by 34.3%. Consequently, DPU went up by 3.2%, from 2.20 cents in the same period last year to 2.27 cents.

For more information about the latest quarterly summary, you can check out the article here.

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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.