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2 Things That Investors Should Know About Fortune Real Estate Investment Trust Now

Fortune Real Estate Investment Trust (SGX: F25U) owns and invests in a portfolio of retail shopping malls located in Hong Kong. There are two things to know about the REIT right now: its latest financial performance and valuation.

Financial performance

Here is a table showing important items from Fortune REIT’s financial performance for first half of financial year ending 31 December 2018 (FY18).

Source: Fortune REIT’s Results Presentation

Both revenue and net property income improved on a year-on-year basis, mainly due to positive rental reversion but partially offset by the divestment of Provident Square. Excluding the effect of Provident Square, total revenue and net property income would have increased by 4.2% and 4.6% year-on-year respectively.

As at 30 June 2018, the retail REIT clocked in a gearing ratio of 22.3% while its occupancy rate stood at 96.0%.

In all, Fortune REIT delivered a positive performance with all metrics coming in ahead of the previous period.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.

The table below shows Fortune REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.

Source: SGX StockFacts (data as of 16 August 2018)

We can see that Fortune REIT’s valuation is mixed with a low PB ratio (discount compared to the market average), offset by low distribution yield (premium valuation).

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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.