It’s earnings season again. Real estate investment trust (REITs) have always been one of the favourite investment choices for risk adverse investors due to its 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 First Real Estate Investment Trust (SGX: AW9U), or First REIT. As a quick introduction, First REIT is a healthcare-focused real estate investment trust. It currently has a portfolio of 20 properties (16 in Indonesia, three in Singapore, and one in…
It’s earnings season again.
Real estate investment trust (REITs) have always been one of the favourite investment choices for risk adverse investors due to its 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 First Real Estate Investment Trust (SGX: AW9U), or First REIT. As a quick introduction, First REIT is a healthcare-focused real estate investment trust. It currently has a portfolio of 20 properties (16 in Indonesia, three in Singapore, and one in South Korea) that are mostly healthcare-related facilities.
For the fourth quarter ended 31 December 2018, First REIT’s gross revenue increased by 2.7% while its net property income (NPI) improved 1.9% as compared to the same period last year. The improvement was primarily due to contributions from the newly-acquired hospitals, as well as increased rental income from existing properties. Distribution per unit (DPU) came in flat at 2.15 cents.
As of 31 December 2018, First REIT’s gearing and committed occupancy rate stood at 35.0% and 100% respectively.
Victor Tan, chief executive of First REIT’s manager, said the following in the earnings release (OUE refers to OUE Ltd (SGX: LJ3) and OUELH refers to OUE Lippo Healthcare Ltd (SGX: 5WA) in the comments below)):
“We are pleased to close the year with stable and credible results underpinned by steady performance from our existing portfolio of 20 properties in Indonesia, Singapore and South Korea. With OUE and OUELH on board, First REIT and Bowsprit are well-positioned to tap on the growing opportunities in the Asia Pacific region to capitalise on the tremendous growth in demand for quality and affordable healthcare. In addition to the right-of-first-refusal to Lippo Karawaci’s pipeline of properties for acquisition in Indonesia, we now also have a first-right-of-refusal from OUELH. Our roadmap for the next three to five years is to look at asset rebalancing, diversifying our income streams by expanding into other geographical regions, as well as exploring opportunities to unlock the value of our existing assets.”
The next REIT on the list is Mapletree Logistics Trust (SGX: M44U). As a quick introduction, Mapletree Logistics Trust, or MLT, is a REIT that owns 140 logistics properties around Asia-Pacific region that includes Singapore, Hong Kong, Japan, China, South Korea and Australia.
In the latest quarter ended 31 December 2018, MLT reported that gross revenue grew 23.0% to S$120.8 million while NPI jumped 25.9% to S$104.5 million.
Also, DPU was up by 5.0% year-on-year to 2.002 cents, mainly due to the higher net property income.The growth in DPU was achieved despite an increase in units from 3.1 billion a year ago to 3.6 billion in the reporting quarter. The stronger performance was mainly driven by growth from the existing portfolio as well as contributions from new acquisitions.
Ng Kiat, chief executive of MLT’s manager, commented:
“Amidst the volatile economic environment, we remain vigilant and focused on working closely with our tenants to maintain a stable portfolio performance. During the quarter, we have strengthened MLT’s portfolio with the acquisitions of three quality logistics facilities in Australia, South Korea and Vietnam and the divestment of a warehouse with older specifications in Singapore. We will continue to keep the momentum on portfolio rejuvenation through quality acquisitions and selective divestments.”
As of 31 December 2018, the REIT’s gearing stood at 38.8% while its occupancy rate was 97.7%.
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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 has a recommendation for First Real Estate Investment Trust.