Its earnings season again.
REITs have always been a favourite investment choice for risk-adverse investors because of their stable earnings qualities. Today, we’re looking at two REITs that have lived up to their investors’ expectations by delivering positive performances in their latest earnings updates.
The first REIT that has performed well is Keppel DC REIT (SGX: AJBU), a real estate investment trust involved in data centres. Listed in December 2014, the REIT manages 15 data centres in Asia and Europe.
For the quarter ended 31 December 2018, gross revenue grew 30.5% year on year to S$48.0 million, while net property income (NPI) improved by 30.1% during the period to S$42.5 million. The stronger performance was due to contributions from new acquisitions in 2018 as well as higher contributions from some existing assets. Consequently, distribution per unit (DPU) was up by 5.7% compared to the same period last year, to 1.85 Singapore cents.
As of 31 December 2018, the REIT’s gearing and occupancy ratios stood at 30.8% and 93.1%, respectively.
In terms of outlook, here’s what the company said in its press release:
“In its Global Economic Prospects released in January 2019, the World Bank expects global growth to ease from 3.0% in 2018 to 2.9% in 2019, citing elevated trade tensions and international trade moderation.
In the data centre industry, BroadGroup expects factors that fuelled growth in 2018, including the rapid growth in data creation and storage needs, increasing digitalisation and cloud adoption, as well as the strong growth in colocation demand from hyperscale cloud players, to continue into 2019. Established data centre hubs are also expected to continue to grow in importance as they offer telecommunications reliability, power availability, and access to neighbouring markets. Improved connectivity as well as the development and adoption of new technologies, data centre outsourcing, as well as drivers such as data sovereignty regulations, will continue to support demand for data centres globally.
Keppel DC REIT, with its established track record and enlarged portfolio of assets in key data centre hubs in Asia-Pacific and Europe, is well-placed to benefit from the growth of the data centre market. The Manager will continue to maintain its focused investment strategy to capture value and strengthen its presence across key data centre hubs.”
The next REIT on the list is CapitaLand Retail China Trust (SGX: AU8U), or CRCT, a Singapore-based real estate investment trust (REIT) investing in retail real estate in China. The trust shopping malls are located in China, Hong Kong, and Macau.
Tan Tze Wooi, CEO of CRCT’s manager, commented:
“CRCT delivered a resilient set of results in FY 2018 on the back of strong operating performance. Portfolio occupancy as at 31 December 2018 was 97.5% and rental reversion was 10.9%. Tenants’ sales at our multi-tenanted malls grew 18.8% year-on-year, while shopper traffic was up 19.4%. Further to the acquisition of Rock Square, CRCT’s investment property value surged 17.8% to RMB13, 993 million as at 31 December 2018. Through active balance sheet management, we have already completed CRCT’s refinancing requirements for 2019 with 80% of the total debt on fixed interest rates. As at 31 December 2018, about 80% of CRCT’s distributable income were hedged into Singapore dollars to mitigate the impact of foreign currency fluctuations.”
For the quarter ended 31 December 2018, gross revenue grew 3.0% to S$55.7 million, while net property income jumped 8.8% to S$35.9 million. The higher net property income was due to the newly acquired Rock Square and the improved performance in CRCT’s core multi-tenanted malls. Similarly, distribution per unit (DPU) grew 2.1% year on year to 2.42 Singapore cents. As of 31 December 2018, the REIT’s gearing stood at 35.4%, while its committed occupancy rate stood at 97.5%.
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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. The Motley Fool Singapore recommends CapitaLand Retail China Trust.