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2 REITS That Have Delivered Strong Results Recently

The 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 growth? Let’s look at two of them.

Mapletree Commercial Trust (SGX: N2IU) or MCT is one of those REITs that has delivered commendable results recently.

As a quick introduction, MCT is the owner of Singapore’s largest mall, VivoCity, together with Mapletree Business City IPSA BuildingMapletree Anson and Bank of America Merrill Lynch HarbourFront. 

Quarterly gross revenue grew 0.8% to S$109.7 million while net property income (NPI) improved 0.8% to S$109.7 million as compared to the same period last year. Similarly, distribution per unit (DPU) came in higher at 2.3 cents, 0.9% higher than a year ago.

The strong results were driven mainly by higher contribution from VivoCity and Mapletree Business City I. The REIT’s portfolio had a committed occupancy rate of 98.7%, as of end-2017.

Ms Sharon Lim, Chief Executive Officer of MCT, made the following comment about the latest quarterly performance:

“MCT has continued to deliver steady performance for 3Q FY17/18 amid headwinds in the operating environment. Underscoring our effort on active asset management, contribution from VivoCity and MBC I were higher and we achieved sustained savings in operating expenses. As a result, MCT recorded resilient growth in NPI and DPU was up 0.9% year-on-year.”

The next REIT that has performed well is Mapletree Greater China Commercial Trust (SGX: RW0U), or MGCCT.

As a quick introduction, MGCCT has properties in China and Hong Kong. It currently has three properties in its portfolio, namely, Festival Walk, Gateway Plaza, and Sandhill Plaza.

Gross revenue for the quarter rose 0.7% to S$88.5 million while NPI was flat at S$71.4 million as compared to a year ago. DPU came in higher at 1.868 cents, 5.1% higher than the same period last year.

The improvement in performance was mainly driven by revenue growth from all the three properties as a result of higher rent. This was offset partially by unfavourable currency movements.

Ms Cindy Chow, Chief Executive Officer of MGCCT, made the following comments:

“We are pleased to report that MGCCT has recorded steady DPU growth in 3Q FY17/18. With our proactive portfolio management efforts, we have maintained a high portfolio occupancy rate of 96.9%, as well as healthy average rental reversion for each asset.

In addition, as we have fixed interest costs for about 75% of MGCCT’s debt and hedged about 78% of FY17/18 expected distributable income to SGD as of 31 December 2017, these have lessened the impact of interest rate increase and exchange rate volatility on DPU.

As announced on 16 January 2018, MGCCT is broadening its investment mandate to include the Japan market. We will continue to evaluate acquisition opportunities to drive further growth of MGCCT, diversify its income source and portfolio geographically, and provide stable long-term returns to our Unitholders.”

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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.