Here Are 2 REITs That Delivered Growth In Their Latest Earnings

We’re at the tail end of the current 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 growth? Let’s look at two of them:

1. In late October, Frasers Centrepoint Trust  (SGX: J69U) reported its fourth-quarter results for the financial year ending 30 September 2017 (FY17).

As a quick introduction, Frasers Centrepoint Trust is a retail REIT with six shopping malls in its portfolio, including Causeway PointNorthpoint and Changi City Point. It also has a stake of over 30% in Malaysia’s Hektar Real Estate Investment Trust (KLSE: 5121.KL), a listed retail-focused real estate investment trust (REIT) in the country. Real estate company Frasers Centrepoint Ltd (SGX: TQ5) is the manager and sponsor, and a major unitholder, of Frasers Centrepoint Trust.

For the fourth-quarter, gross revenue increased 8.1%, and net property income (NPI) improved 10% compared to a year ago. Along with it, distribution per unit (DPU) came in higher at 2.97 cents, a 5.5% increase compared to the same period last year. The stronger performance was mainly driven by North Point New Wing (NPNW), Causeway Point and Changi City Point.

Dr Chew Tuan Chiong, chief executive office of the REIT manager, added his comments on the quarter:

“We are delighted that FCT [Frasers Centrepoint Trust] has delivered a healthy set of results in 4Q17 to end FY2017 on a high note with record DPU and NAV per unit. FY2017 was a challenging year, especially with the slower retail market environment and the AEI works at NPNW which required a lot of attention.

We are excited to commence the new financial year 2018 on a strong footing, with a rejuvenated NPNW (North City North Wing) and sustained steady performance from the properties in our portfolio. NPNW’s performance will continue to pick up progressively, as occupancy improves and rental income recovers.”

2. Another REIT that posted positive results is BHG Retail REIT (SGX: BMGU).

As a brief introduction, BHG REIT focuses on retail malls in China and currently has a portfolio with five properties. Its sponsor is the China-listed Beijing Hualian Department Store Co. Ltd, which is part of the Beijing Hualian Group, one of China’s largest retail operators.

Gross revenue grew 6.6% to RMB 80.7 million while net property income (NPI) improved by 9.9% to RMB 51.6 million compared to the same period last year. Along with it, distribution per unit (DPU) for the quarter grew 9.3% to 1.41 cents. The REIT’s positive performance was driven by rental uplifts for new and renewed leases, as well as in-built rental escalation for ongoing tenancies.

Ms Chan Iz-Lynn, chief executive officer for the REIT manager, said:

“BHG Retail REIT has delivered commendable performance in the third quarter. The underlying operational growth affirms our community mall focused strategy, which further benefits from a rising domestic consumption environment in China.

Our results were underpinned by the proactive engagement with neighbouring communities, in-depth knowledge of local consumer sentiment, and firm partnership with our tenants. Looking ahead, we will continue to harness our strengths and pursue sustainable growth through both organic and acquisition channels.”

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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.