2 REITS That Have Delivered Mixed Performances Recently

We are towards the end of the earnings season. Given many REITs have already reported their results, it would be useful to group them into three categories – good, bad and mixed.

In this article, I will look at two REITs that have recently delivered mixed financial results.

We will start with Parkway Life REIT (SGX: C2PU).

As a quick background, Parkway Life REIT is one of the largest listed healthcare REITs in Asia by asset size. The REIT has ownership over three private hospital properties locally and holds stakes in 46 healthcare-related assets in Japan. It also has strata-titled units/lots in Gleneagles Intan Medical Centre in Malaysia.

Mr Yong Yean Chau, Chief Executive Officer of the REIT’s manager, commented on the latest performance:

“This has been a positive start for the year for PLife REIT. Recurrent DPU has continued to grow, on the back of favourable rental lease structures, which ensures steady rental growth whilst protecting revenue downside, amid uncertain market conditions.

On the risk management front, we have adopted prudent financial risk management strategies to manage the exposure to interest rate risk and foreign currency risk. This further strengthens the stability of the REIT’s net asset value and cash flows. With our enlarged portfolio of 50 high-quality healthcare and healthcare-related assets, PLife REIT is well positioned to benefit from the resilient growth of the healthcare industry. ”

Financially, gross revenue grew 3.2% to S$27.8 million while net property income (NPI) declined by 3.3% to S$26.0 million as compared to the same period last year. However, distribution per unit (DPU) declined 3.4% as compared to the same period last year to 3.17 cents. The decline in DPU was due to a one-off distribution of divestment gain last year. Excluding the one-off distribution, DPU would have increased by 3.6%. As of 31 March 2018, the REIT’s gearing stood at 38.0% and its committed occupancy rate was 100%.

The next REIT on the list is IREIT Global (SGX: UD1U).

As a quick introduction, IREIT Global has five freehold properties in Germany. These properties are located in the key German cities of Berlin, Bonn, Darmstadt, Münster and Munich.

For the quarter ended 31 March 2018, gross revenue declined 2.0% year-on-year to €8.6 million while NPI declined by 1.9% to €7.7 million. Yet, the REIT’s DPU for the quarter grew by 1.4% year-on-year (in Singapore dollar terms) to 1.46 Singapore cents. This was mainly due to favourable average foreign currency exchange rates between the Euro and the Singapore dollar. As of 31 March 2018, the REIT’s gearing was 40.5% whilst its committed occupancy rate stood at 98.3%.

Mr Aymeric Thibord, the Chief Executive Officer of the REIT’s manager, commented:

“The European real estate market has in general experienced rising rents, decreasing vacancy rates and attractive spreads between property yields and government bond yields. Looking ahead, IREIT will focus its efforts on three key areas, namely acquisitions, upcoming lease expiries and debt maturities, in order to build a sustainable return for 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.