MENU

These 2 REITs Delivered Growth In Their Latest Earnings

We’ve entered a new 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 reported lower numbers? Let’s look at two of them:

1. In late October, Frasers Hospitality Trust (SGX: ACV) released its fourth quarter earnings for its fiscal year ended 30 September 2017 (FY2017).

As a quick introduction, Frasers Hospitality Trust is a stapled trust that comprises a real estate investment trust and business trust. Its investment focus is on hotels and serviced residences. At the end of FY2017, its portfolio consisted of 15 properties located across nine cities in Asia, Australia, and Europe. These properties have a total of 3,072 hotel rooms, and 842 serviced residence units.

In the reporting quarter, the trust’s gross revenue jumped by 24.2% year-on-year to S$41.6 million, while net property income increased by 9.8% to S$31.5 million. This drove a 7.2% increase in Frasers Hospitality Trust’s distribution per stapled security (DPS) to 1.2763 cents.

The trust’s two largest geographical markets by gross revenue are Australia and Singapore. In the fourth quarter of FY2017, these two countries collectively accounted for 64% of Frasers Hospitality Trust’s gross revenue.

Looking ahead, the trust commented that there was a 7.4% year-on-year increase in international arrivals to Australia for January to August 2017. The trust said that “Sydney’s strong performance is expected to continue, supported by strong corporate demand, inbound tourism growth and a busy events calendar.” The trust also commented that “growth in Melbourne’s hotel occupancy is expected to remain subdued due to more room supply.”

As for Singapore, our Garden City saw 4.0% year-on-year growth in visitor arrivals in the first eight months of 2017. Although Frasers Hospitality Trust expects pressure on its hotel trading performance to remain for the rest of 2017 due to supply, the situation is “expected to ease as new hotel projects going forward suggest substantially slower supply growth.”

2. The next REIT on my list is Viva Industrial Trust (SGX: T8B), another stapled trust that consists of a business trust and real estate investment trust. Viva Industrial Trust invests in business parks and other industrial properties. Currently, its portfolio comprises nine properties in Singapore.

Two weeks ago, Viva Industrial Trust released its 2017 third quarter earnings. The REIT produced good growth, as gross revenue, net property income, distributable income, and the distribution per stapled security (DPS), all increased. Gross revenue was up 16.8% to S$28.3 million; net property income grew 18.3% to S$20.6 million; distributable income climbed 13.6% to S$17.9 million; and DPS came in 5.0% higher at 1.9 cents.

Viva Industrial Trust’s stronger revenue was driven by growth in Viva Business Park, and new contributions from 6 Chin Bee Avenue.

In its earnings release, Viva Industrial Trust commented that “demand for industrial space is expected to improve with stronger industrial production.” Wilson Ang, the chief executive officer of Viva Industrial Trust’s manager, also said that the trust’s portfolio is “well positioned to meet the needs of [its] existing and prospective tenants as Singapore’s economic upturn gains momentum.”

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.