Its earnings season again. Real estate investment trusts (REITs) have always been one of the favourite investment choices for risk adverse investors due to their stable earnings qualities. In this article, I will look at two REITs that have lived up to their investors’ expectation by delivering positive performances in their latest earnings updates.
The first REIT on the list is SPH REIT (SGX: SK6U). As a quick introduction, SPH REIT is an owner of two retail malls in Singapore, namely, Paragon and The Clementi Mall. It recently added The Rail Mall into its stable of properties.
For the quarter ended 31 August 2018, gross revenue grew marginally by 0.2% year-on-year to S$53.0 million while net property income (NPI) fell by 1.9% to S$41.0 million. Distribution per unit (DPU) was up by 0.7% as compared to a year ago to 1.43 cents. On 28 June 2018, SPH REIT completed the acquisition of The Rail Mall for S$ 63.24 million.
As of 31 August 2018, the REIT’s gearing stood at 26.3%, which is a safe distance from the regulatory ceiling of 45%.
Susan Leng, chief executive of SPH REIT’s manager, said:
“SPH REIT has delivered yet another year of consistent returns to our unitholders and our well-positioned assets continued its track record of close to full occupancy. The resilient performance for five years since listing in 2013 amid retail sales downturn, is a testament to our long-standing philosophy of partnership with our tenants for mutual success. We are pleased that our tenants have registered higher sales and lower occupancy cost.”
The next REIT on the list is ESR-REIT (SGX: J91U). As a quick introduction, ESR-REIT invests in industrial real estate, and currently has a portfolio of 56 properties located across Singapore.
For the quarter ended 30 September 2018, gross revenue grew by 19.4% year-on-year to S$32.4 million while NPI improved 15.0% to S$22.5 million. The improvement was primarily due to contributions from two newly-acquired properties. Consequently, DPU grew by 4.1% to 1.004 cents.
As of 30 September 2018, the ESR-REIT’s gearing stood at 30.3%. The recent proposed merger between ESR-REIT and Viva Industrial Trust (SGX: T8B) was completed on 15 October 2018.
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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.