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2 REITS That Have Delivered Mixed Performances Recently

The earnings season rolls on in the local stock market.

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

Ascendas Real Estate Investment Trust (SGX: A17U), or Ascendas REIT, is the first on the list that has delivered a mixed performance.

As a quick introduction, Ascendas REIT owns properties that are used for either commercial or industrial purposes, or both. It has 101 properties in Singapore and 31 properties in Australia.

Quarterly gross revenue and net property income (NPI) were up by 4.1% and 1.7%, respectively, year-on-year. Yet, distribution per unit (DPU) was down by 0.6% to 3.97 cents. The growth in revenue and net property income were mainly driven by acquisitions and completion of redevelopment property. On the other hand, the lower DPU was due to absence of tax return in this quarter and an increase in the number of units in issue.

As of 31 December 2017, Ascendas REIT’s gearing ratio stood at 35.2% whilst its occupancy rate was 91.1%.

Manohar Khiatani, the non-executive director of the REIT’s manager, said:

“Although the market remains highly competitive, we were able to achieve higher revenue and net property income by acquiring good quality assets, streamlining our portfolio and maintaining good tenants.”

The next REIT on the list is Parkway Life REIT (SGX: C2PU).

As a quick introduction, Parkway Life REIT is one of the largest listed REITs in Asia by asset size. The REIT has owns three private hospital properties in Singapore and hold stakes in 45 healthcare-related assets in Japan. It also has strata-titled units/lots in Malaysia’s Gleneagles Intan Medical Centre.

Gross revenue for the quarter declined by 0.7% year-on-year to S$27.5 million while NPI improved by 0.7% to S$25.7 million. Meanwhile, the REIT’s DPU improved 10.6% to 3.38 cents, mainly due to the increase in distributable income and one-off gain from disposal.

Yong Yean Chau, chief executive of the REIT’s manager, made the following comments:

“Building on our strategies and network developed in the last 10 years, we are pleased to deliver another sound set of results for Unitholders in 2017. In 1Q 2017, we completed our 2nd Strategic Japan Asset Recycling Exercise and successfully rebalanced our Japan portfolio with the acquisition of five better quality Japan properties. Maintaining a strong focus in cultivating good Landlord-Lessee relationships, three more asset enhancement initiatives were rolled out for our Japan portfolio in 2017, bringing the total to twelve to-date.

Throughout the year, proactive financial and capital management continues to work in unison to enhance the stability of distributions to Unitholders. We enter our second decade with confidence, with a healthy level of gearing and a lowered effective all-in cost of debt. With no refinancing need till 2019, the weighted average debt to maturity had been lengthened to 3.1 years from 2.9 years, with a well staggered debt maturity profile. Our interest cover ratio stands healthy at 11.3 times with interest rate exposure largely hedged and the JPY net income fully hedged till 1Q 2022.”

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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.