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2 REITS That Have Delivered Strong Performances Recently

In a low-interest environment, REITs are a particularly attractive investment due to their relatively predictable earnings power. In this article, I will look at two REITs that have lived up to their investors’ expectations by delivering positive performance in their latest earnings.

EC World Real Estate Investment Trust (SGX: BWCU) or EC World REIT is the first on the list that has delivered a positive performance.

As a quick introduction, EC World REIT is the first Chinese specialised logistics and e-commerce logistics REIT that was listed here in Singapore in July 2016. It owns properties mainly used for e-commerce, supply-chain management and logistics.

Quarterly gross revenue and net property income (NPI) were lower by 8.6% and 12.5%, respectively, as compared to the forecast given in its initial public offering (IPO) prospectus. However, distribution per unit (DPU) was up by 0.5% as compared to the forecast of 1.504 cents.

Lower gross revenue and NPI was due to “accounting adjustments for effective rent which have no impact on the DPU”. In other words, investors would be better off just focusing on DPU since accounting adjustments impacted both gross revenue and NPI. Gearing was 29.2%, as at 31 December 2017, while committed occupancy rate stood at 100%.

Goh Toh Sim, Executive Director and Acting CEO of the Manager, commented on the latest results:

“We are pleased that ECW delivered forecast beating results for the second year running. This is a testament to the quality and stability of the ECW’s asset portfolio as well as our active asset management and prudent financial management strategies. The strong performance also lays a solid foundation for us to expand our portfolio in the coming year”.

The next REIT on the list is Dasin Retail Trust (SGX: CEDU) or DRT.

As a quick introduction, DRT is the only China retail property trust providing direct exposure to the Pearl River Delta region. Listed in January 2017, DRT’s property portfolio comprises four retail malls located in Zhongshan City, Guangdong province, China.

Gross revenue for the full year came in 16% higher than forecast at S$57.7 million while NPI was 14% higher than forecast at S$46.6 million. Similarly, the REIT’s full-year DPU was up by 6% as compared the forecast of 6.74 cents. Gearing and committed occupancy rate stood at 30.7% and 100% respectively, as at 31 December 2017.

Li Wen, CEO of the Trustee-Manager of DRT, commented on the trust’s performance:

“We are pleased to achieve a set of commendable results for DRT’s first financial year. The DPU yield of 8.95% exceeded what was promised during the initial public offering. This is a testament to the strong operating metrics of the quality malls in the portfolio.

Occupancy remains strong at 100% occupancy, as a result of our proactive asset management and leasing capabilities. We will continue to enhance our portfolio to provide stable and growing distributions for 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.