In mid-May, BHG Retail REIT (SGX: BMGU) released its 2018 first quarter earnings update. As a quick introduction, BHG Retail REIT is a real estate investment trust that owns retail malls in China. It currently has a portfolio of five malls, and 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.
Here are nine things investors should know about BHG Retail REIT’s latest results:
1. Gross revenue for 2018’s first quarter grew 11.5% year-on-year to RMB 84.0 million, while net property income (NPI) improved by 11.2% to RMB 56.1 million.
2. Yet, distribution per unit (DPU) remained flat at 1.39 Singapore cents compared to the same period last year.
3. BHG Retail REIT’s gearing, as of 31 March 2018, stood at 33.0%. REITs in Singapore have a regulatory gearing ceiling of 45%, so BHG Retail REIT has plenty of debt headroom given its low gearing.
4. The occupancy rate of BHG Retail REIT’s portfolio stood at 99.0% at the end of the reporting quarter, with four properties achieving 100% occupancy, and one property at 96.2%.
5. The weighted average lease expiry stood at a healthy 4.3 years by gross rental income.
6. Above 65% of the REIT’s gross rental income, and close to 80% of its net lettable area (NLA), come from tenants that are in the experiential segments.
7. Based on BHG Retail REIT’s annualised DPU of 5.56 Singapore cents, and its closing unit price of S$0.78 as of 25 May 2018, the REIT has an annualised distribution yield of 7.2%
8. Given that BHG Retail REIT is in the business of owning malls, the state of China’s economy is important to note too. In the first quarter of 2018, China’s economy grew by 6.8% year-on-year.
9. Disposable income and expenditure per capita for urban residents in China increased by 8.0% and 5.7%, respectively, during the reporting quarter as well.
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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.