Real estate investment trusts (REITs) are particularly attractive due to their relatively predictable earnings 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.
Ascendas Real Estate Investment Trust (SGX: A17U) or Ascendas REIT is one of those REITs that has delivered commendable result recently. As a quick introduction, Ascendas REIT owns properties that are used for either commercial or industrial purposes, or both. It has 99 properties in Singapore and 33 properties in Australia.
In the first quarter of the financial year ending 31 March 2019, Ascendas REIT’s gross revenue grew 1.5% to S$216.6 million while net property income (NPI) rose by 3.8% to S$159.2 million. The REIT’s distribution per unit (DPU) was down by 1.2% year-on-year to 4.002 cents. Excluding one-off distribution, DPU would have improved 4.0% year-on-year. The improvement in performance was driven by contributions from newly acquired properties in Australia and a redeveloped property in Singapore.
As of 30 June 2018, the REIT’s gearing stood at 35.7% while its occupancy rate was 90.5%.
William Tay, chief executive of Ascendas REIT’s manager, made the following comments:
“We are pleased to start the new financial year on a positive note amidst challenging market conditions in Singapore. During the quarter, we completed two acquisitions in Australia and a redevelopment project in Singapore worth S$112.3 million. At the same time, we look forward to completing our maiden investment of 12 logistics properties in the UK worth S$373.2 million, which will improve the quality and diversity of Ascendas Reit’s earnings.”
The next REIT that has performed well is BHG Retail REIT (SGX: BMGU). As a quick introduction, BHG REIT focuses on retail malls in China and currently has a portfolio with five properties. 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 second quarter ended 30 June 2018, gross revenue grew 11.9% year-on-year to S$17.7 million while NPI increased by 9.9% to S$12.0 million. The performance improvement was driven by rental uplift from all three multi-tenanted malls and a higher occupancy rate in Chengdu Konggang Mall after undergoing asset enhancement initiatives. DPU remained flat at 1.35 Singapore cents as compared to the same period last year.
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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.