2 REITS That Have Delivered Strong Performances Recently

In a low-interest environment, real estate investment trusts (REITs) are particularly attractive due to its relatively predictable earning power. In this article, let’s look at two REITs that have lived up to their investors’ expectation by delivering positive performance in their latest earnings updates.

Mapletree Logistics Trust (SGX: M44U), or MLT, is one of those REITs that has delivered commendable results recently. MLT is a REIT that owns 134 logistics properties around the Asia-Pacific region, including Singapore, Hong Kong, Japan, South Korea, Australia.

In the latest quarter, gross revenue grew 10.1% year-on-year to S$ 105.4 million whilst net property income (NPI) improved by 11.1% during the period to S$89.8 million. Similarly, distribution per unit (DPU) was up by 3.7% year-on-year to 1.957 cents. The 3.7% year-on-year growth was achieved despite an increase in units from 2.5 billion last year to 3.2 billion this year. The stronger performance was mainly driven by growth from the existing portfolio as well as contributions from two acquisitions in Hong Kong.

Ms Ng Kiat, Chief Executive Officer of MLT, made the following comments:

“This has been an exciting period of growth for MLT as we forged ahead with our expansion plans. In China, we strengthened MLT’s presence with the acquisition of a 50% interest in 11 new Grade-A logistics properties. In Singapore, we divested a warehouse with older specifications and recently announced the proposed acquisition of five modern ramp-up warehouses. These initiatives are in line with our strategy to build a high quality and resilient portfolio to deliver sustainable returns for our Unitholders.”

Based on MLT’s annualised DPU of 7.83 Singapore cents and a closing price of S$1.28 as at 23 July 2018, the REIT has a trailing distribution yield of 6.1%.

The next REIT on the list is Mapletree Industrial Trust (SGX: ME8U) or MIT. MIT has 86 industrial properties and 14 data centres in the US (through its 40% joint venture).

For the quarter ended 30 June 2018, gross revenue grew 3.0% year-on-year to S$91.5 million while NPI  grew 1.9% year-on-year to S$69.5 million. The improvement was primarily due to income contribution from the build-to-suit project for HP Singapore, MIT’s 40% interest in the portfolio of 14 data centres in the United States, and early termination of leases, partially offset by lower occupancies across most property segments. As a result, DPU was up by 1.7% year-on-year to 3.0 cents.

Mr Tham Kuo Wei, Chief Executive Officer of MIT, made the following comments:

“The acquisition and upgrading of 7 Tai Seng Drive and the completion of the BTS data centre development, Mapletree Sunview 1, demonstrate our ability to deliver customised industrial real estate solutions to our clients.”

Based on MIT’s annualized DPU of 12.0 cents (calculated using the year-to-date DPU of 3.0 cents) and its closing unit price of S$2.02 as of 24 July 2018, the REIT has a trailing distribution yield of 5.9%.

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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. Motley Fool has a recommendation for Mapletree Industrial Trust.