BHG Retail REIT (SGX: BMGU) is a real estate investment trust that focuses on retail malls in China. It currently has a portfolio of five malls. Its sponsor is the China-listed Beijing Hualian Department Store Co. Ltd, which is part of the Beijing Hualian Group, one of China’s largest retail operators.
There are two things about the REIT that investors may want to know about right now: its latest financial performance and valuation.
Here’s a table showing important items from BHG Retail REIT’s financial performance for the third quarter of financial year ending December 2018.
Source: BHG Retail REIT’s Earnings Update
Overall, we can see that the performance was mixed. On the positive end, gross revenue and net property income (NPI) improved year-on-year due to positive rental reversion and stronger occupancy rates. Yet, distribution per unit (DPU) declined by 5.7% year-on-year to 1.33 Singapore cents due to lower amount of income for distribution and increase in units issued.
As of 30 September 2018, the REIT’s gearing ratio and occupancy rate stood at 32.7% and 97.5%, respectively.
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 BHG Retail 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
We can see that BHG Retail REIT is trading at a discount to market average based on its low PB ratio and high distribution yield.
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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.