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.
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.
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).
There are 28 surprising and important things we think every Singaporean investor should know—and we’ve laid them all out in The Motley Fool Singapore’s new e-book. Packed with information and insights, we believe this book will help you be a better, smarter investor. You can download the full e-book FREE of charge—simply click here now to claim your copy.
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.