MENU

Here Are 2 REITS That Have Delivered Weaker Quarterly Performances Recently

Earnings season rolls on in Singapore’s stock market.

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 declines? Let’s look at two of them:

1. CapitaLand Retail China Trust (SGX: AU8U) reported its fourth quarter earnings at the end of last month.

As a quick introduction, CapitaLand Retail China Trust is a Singapore-based REIT that invests in retail malls in China. The REIT’s 10 malls are located in seven of China’s cities.

For the quarter, the REIT’s gross revenue declined 4.6% to S$54.11 million while net property income fell by 5.2% to S$34.78 million compared to the same period last year. Distribution per unit (DPU) was flat year-on-year at 2.37 cents. The weaker performance was due to lower revenue at CapitaMall Grand Canyon which experienced disruption due to an operational review by authorities. There was also the lack of contribution from CapitaMall Anzhen which had been divestedThe REIT’s portfolio had a committed occupancy rate of 95.4% at end-2017.

Tan Tze Wooi, CEO of CRCT commented:

“CRCT has delivered a good set of results for FY 2017. This was underpinned by the contribution of CapitaMall Xinnan and the resilience of our core multi-tenanted malls, which have been keeping up with the changing needs of the population catchments through active lease management and keen shopper engagement.

“In the year, we strengthened the quality of our portfolio through our portfolio reconstitution strategy. We unlocked the value of master-leased CapitaMall Anzhen and acquired multi-tenanted Rock Square in Guangzhou, which has a longer balance tenure and stronger growth potential. The acquisition marks our diversification into another first-tier city, and creates new leasing synergies with the existing malls in our portfolio.”

2. OUE Hospitality Trust (SGX: SK7) was another REIT that announced weaker quarterly results recently.

As a quick introduction, OUE Hospitality Trust is a stapled trust that consists of a real estate investment trust and a business trust. The trust invests primarily in hospitality-related properties. Its portfolio currently consists of the Crown Plaza Changi Airport hotel, and the connected Mandarin Orchard Singapore hotel and Mandarin Gallery high-end retail mall. All three properties are located in Singapore.

In its latest quarter, OUE Hospitality Trust’s revenue improved 1.8% to S$33.81 million, but net property income (NPI) fell by 1.1% compared to the same period last year. Distribution per stapled security (DPS) was down 6.6% year-on-year to 1.27 cents. The lower DPS was due to lower NPI and a higher unit count from a right issue. As of 31 December 2017, the REIT’s gearing stood at 38.8% and its committed occupancy rate for Mandarin Gallery stood at 96.9%.

Chong Kee Hiong, CEO of the Manager, commented:

“In 4Q2017, MOS posted its third consecutive quarter of RevPAR increase as compared to the corresponding quarters last year. RevPAR recorded was $225 supported by higher average room rates compared to RevPAR of $220 in 4Q2016. The hotel’s banquet sales and food and beverage outlets have also performed better. As a result, master lease income for MOS was $0.8 million higher. This has partially mitigated the absence of $1.6 million of income support from CPCA in 4Q2017. CPCA’s operations continues to be ramped up amidst a challenging market.”

We believe we've identified a dividend dynamo whose financials are strong enough to qualify its dividend as "safe" - and have profiled this stock in a research report that's now available to download completely free of charge. Simply click here to claim your copy today!

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.