These 2 REITS Recently Delivered Quarterly Earnings Growth

We’ve come to the tail end of the earnings season.

As is common with every earnings season, there will be some real estate investment trusts (REITs) posting growth, some REITs posting mixed numbers, and some REITs experiencing declines. So, which are the REITs that have recently showed growth? Let’s look at two of them:

1. In early August, Lippo Malls Indonesia Retail Trust (SGX: D5IU) released its 2017 second quarter earnings.

As a quick introduction, Lippo Malls is a retail REIT that invests in retail properties in Indonesia. As of 30 June 2017, its portfolio comprises 21 retail malls and seven retail spaces.

During the reporting quarter, the REIT experienced a 6.6% year-on-year increase in gross revenue to S$49.9 million. This drove its net property income 8.6% higher (to S$46.8 million), and ultimately led to a 5.9% jump in the distribution per unit to 0.90 cents.

Positive rental reversions had helped drive growth at Lippo Malls Indonesia Retail Trust. Contributions from Lippo Mall Kuta, which was acquired in December 2016, also helped.

In its earnings release, Lippo Malls Indonesia Retail Trust gave updates on its market environment. It said that Indonesia’s economy grew 5.01% in the first quarter of 2017, up 4.94% from the preceding quarter. It also said that “retail sales in Indonesia rose 6.7% in June 2017, due to the seasonal surge in public demand  during the Ramadan and Aidilfitri season.”

2. Next in line is Mapletree Commercial Trust (SGX: N2IU). The REIT released its latest results – for the first quarter of its fiscal year ending 31 March 2018 (FY17/18) – in late July.

Mapletree Commercial Trust’s portfolio consists of five properties that are all located in Singapore. Four of them are commercial buildings, while the remaining property is VivoCity, Singapore’s largest retail mall .

The REIT had experienced a solid quarter. Gross revenue was up 46.9% year-on-year to S$107.8 million, net property income surged 49.6% to S$84.2 million, while the distribution per unit climbed 9.9% to 2.23 cents.

During the quarter, VivoCity experienced a 7.2% and 3.8% increase in shopper traffic and tenant sales, respectively. Furthermore, the REIT’s overall occupancy rate was 98.1%, a slight improvement from the occupancy rate of 97.9% recorded in the previous quarter.

In its earnings release, Mapletree Commercial Trust commented that the rental outlook for retail properties in Singapore “for the rest of the year and into 2018 is muted and vacancy is expected to continue to rise in H2 2017.”

Regarding the office market, the REIT said that “there is a general consensus that the office sector has improved and the worst could be over.” But, Mapletree Commercial Trust also cautioned that “the outlook remains patchy with landlords of better quality buildings being better placed to capture the future projected upswing in rents.”

Coming to the business park sector, the REIT said thatwhile there are challenges in demand, supply-side pressure remains relatively insignificant given the limited number of projects in the pipeline.”


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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.