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2 REITS That Have Announced Mixed Performances Recently

We are in the midst of the earnings season. Given many real estate investment trusts (REITs) have reporting their results at the same time, it would be useful to group them into three categories – good, bad and mixed. In this article, I will look at two REITs that have recently delivered mixed financial results.

We will start with Ascendas Real Estate Investment Trust (SGX: A17U). As a quick background, Ascendas REIT owns properties that are used for either commercial or industrial purposes, or both. It has properties in Singapore, Australia and United Kingdom.

In the quarter ended 30 September 2018, the REIT reported that gross revenue grew 1.1% to S$218.1 million while net property income fell by 1.0% to S$158.9 million. Similarly, the REIT’s distribution per unit (DPU) was down by 4.2% year-on-year to 3.887 cents. Gross revenue improved as compared to the same period last year due to new acquisitions in Australia and the UK. On the other hand, DPU declined by 4.2% mainly due to increase in the number of share units.

William Tay, chief executive and executive director of the REIT’s manager, said:

“We had a very active quarter and made significant progress in expanding into the UK. We also raised equity in anticipation of the second UK portfolio acquisition which was completed in October 2018. Besides Singapore, our long term strategy is to build up our portfolio in Australia, the UK and also into Europe.”

As of 30 September 2018, the REIT’s gearing stood at 33.2% while its committed occupancy rate was 90.6%.

The next REIT on the list 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.

In the quarter ended 30 September, BHG REIT reported that gross revenue grew 5.1% year-on-year to S$17.3 million, while NPI improved by 3.5% to S$10.9 million. Yet, DPU declined 5.7% year-on-year to 1.33 Singapore cents. As of 30 September 2018, the REIT’s gearing ratio and occupancy rate stood at 32.7% and 97.5% respectively.

Chan Iz-Lynn, chief executive of BHG REIT’s manager, commented:

“Amidst persistent uncertainties from international trade environment, and ongoing China economic reforms, China retail outlook remains positive. In 3Q 2018, China retail sales of consumer goods rose 9.3%2 year-on-year to RMB 27.4 trillion. Disposable income and expenditure per capita of urban residents increased 7.9% and 6.5% year-on-year respectively in 9M 2018. For us, our portfolio of community malls nested amongst high population density precincts, continued to exhibit healthy leasing demands, rental uplifts, and sustained high occupancy rate. Looking ahead, the REIT’s strategy remains committed to drive growth organically, pursue potential accretive acquisitions, and deliver long term sustainable returns to our unitholders”

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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.