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2 REITs That Have Delivered Mixed Performances Recently

It’s earnings season again!

Given many REITs are reporting their results at the same time, it would be useful to group them into three categories: good, bad and mixed. In this article, we will look at two REITs that have recently delivered a mixed bag of financial results.

We will start with Cache Logistics Trust (SGX: K2LU).

As a quick background, Cache Logistics Trust is a real estate investment trust (REIT) that focuses on logistics properties. The REIT currently has 27 logistics warehouse properties in its portfolio which are located in Singapore, Australia, and China.

For the quarter ended 30 September 2018, gross revenue grew 14.8% to S$31.5 million while net property income grew by 8.1% to S$23.1 million. The improvement was driven by higher contribution from existing properties and its new acquisitions. Yet, the REIT’s distribution per unit (DPU) was down by 4.3% year-on-year to 1.475 cents, mainly due to lower income for distribution and issue of new units.

Mr Daniel Cerf, Chief Executive Officer of the REIT, commented:

“3Q FY18 was a stable quarter where we saw an improvement in our DPU compared to the preceding quarter. Through building up the Australia portfolio since 2015, we have been able to reap the benefits of our diversification efforts over time, with Australia now contributing about 23% of our gross revenue.

As we continue to rebalance, optimise and grow the Cache portfolio, we must also maintain a prudent capital management approach. As announced last week, we successfully completed the refinancing of our Singapore-dollar loan facilities which were due in 2018. In the process, we have significantly improved Cache’s capital structure and operational flexibility through achieving a largely unencumbered portfolio and extending our average debt maturity.”

As of 30 September 2018, the REIT’s gearing stood at 35.6% while its committed occupancy rate stood at 96.9%.

The next REIT on the list is CapitaLand Retail China Trust (SGX: AU8U) or CRCT.

As a quick introduction, CRCT is a Singapore-based real estate investment trust (REIT) which owns retail-based properties in China. The REIT has 11 shopping malls that are located in eight Chinese cities.

For the quarter ended 30 September 2018, gross revenue declined 1.1% to S$55.4 million while net property income increased by 2.2% to S$36.7 million. The higher net property income was due to lower property expenses. Similarly, distribution per unit (DPU) grew 1.7% year-on-year to 2.41 cents. As of 30 September 2018, the REIT’s gearing stood at 35.9% while its committed occupancy rate stood at 97.7%.

Mr Tan Tze Wooi, CEO of CRCT commented:

“CRCT’s growth in 3Q 2018 extends the positive momentum from our portfolio reconstitution. Portfolio occupancy as at 30 September 2018 was a healthy 97.7% and rental reversion for the quarter was a robust 12.1%. Our active asset management strategy with a tailored approach for each mall is progressing well. Rock Square registered a strong positive rental reversion above 20% for the third consecutive quarter by bringing in 25 prominent international and domestic brands, many of which are new-to-market in Haizhu District. To differentiate CapitaMall Qibao’s offerings, we increased its exposure to the resilient learning and education sector by more than three times over the last five years. We also expanded the rooftop playground to host more interactive activities that are popular with children, further enhancing CapitaMall Qibao’s attractiveness to young families.”

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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 Singapore has a recommendation for Capitaretail China Trust.