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2 REITS That Have Delivered Strong Performances Recently

REITs are a particularly attractive investment vehicle due to their relatively predictable earning power. In this article, we will look at two REITs that have lived up to the investors’ expectation by delivering positive performances in their latest earnings.

The first REIT that has performed well is Dasin Retail Trust (SGX: CEDU).

As a quick introduction, Dasin Retail Trust, which listed in January 2017, is the only property trust listed in Singapore’s stock market that has a direct exposure and focus on retail malls in China’s Pearl River Delta region. The trust’s portfolio currently comprises four malls in Zhongshan City of China’s Guangdong province.

Li Wen, Chief Executive Officer of the REIT’s manager, commented on the latest performance:

“We are pleased to kickstart the financial year by attaining 100% occupancy within the portfolio, and also achieving and annualised DPU yield of 9.28%. This is a testament to the strong operating metrics of the quality malls in the portfolio as well as our proactive asset management and leasing capabilities. We will continue to enhance our portfolio to provide stable and growing distributions for our unitholders.”

The REIT’s gross revenue for the first quarter of 2018 came in at S$18.5 million, 85% higher than that of 2017. Net property income (NPI) of S$14.9 million was also 86% stronger than a year ago. Similarly, its distribution per unit (DPU) of 1.83 cents was 23% higher than that of last year. The stronger performance was due to better operational performance and contribution from the acquisition of Shiqi Metro Mall.

As of 31 March 2018, the trust’s gearing stood at 30.4% and the weighted average lease to expiry (by gross rental income) was at 4.01 years.

The next REIT on the list is BHG Retail REIT (SGX: BMGU).

As a quick introduction, BHG Retail REIT is a real estate investment trust that focuses on retail malls in China. It currently has a portfolio of five malls. Its sponsor is the China-listed Beijing Hualian Department Store Co. Ltd, which is part of the Beijing Hualian Group, one of China’s largest retail operators.

For the first quarter ended 31 March 2018, gross revenue grew 11.5% year-on-year to RMB 84.0 million, while NPI improved by 11.2% to RMB 56.1 million. DPU remained flat at 1.39 Singapore cents as compared to the same period last year. The stronger performance was driven by healthy leasing activities as well as higher occupancy rates.

Chan Iz-Lynn, Chief Executive Officer of BHG Retail REIT’s manager, commented:

“BHG Retail REIT’s portfolio of community-focused retail properties in high population density neighborhoods continued to deliver robust financial and operational performance in 1Q 2018. Portfolio occupancy rate increased from 98.6% to 99.0% for the 12 months ended 31 March 2018, mainly due to the completion of the Chengdu Konggang asset enhancement initiative in July 2017.

Leasing activities in the first quarter of 2018 continued to display strong rental reversion from existing and new tenants. Looking ahead, we will continue to proactively manage our tenancies and properties, actively seek yield-accretive acquisitions, and continue to deliver stable and regular distributions to our unitholders”

Based on BHG REIT’s annualised DPU of 5.56 Singapore cents, and its closing unit price of S$0.77 as of 17 May 2018, the REIT has a trailing distribution yield of 7.2%.

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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.