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These 2 Singapore REITS Have Delivered Mixed Performances Recently

Many companies reported their financial results over the past few weeks — some of them have had good news to share, some bad, and some a little of both. Today, we’re looking at two REITs that have recently delivered mixed financial results.

We’ll start with Parkway Life REIT (SGX: C2PU), one of the largest listed healthcare real estate investment trusts (REIT) in Asia by asset size. The REIT has ownership over three private hospital properties locally and holds stakes in 46 healthcare-related assets in Japan. It also has strata-titled units/lots in Gleneagles Intan Medical Centre in Malaysia.

For the year ended 31 December 2018, gross revenue grew 2.7% to S$112.8 million, while net property income (NPI) improved by 2.7% to S$105.4 million, respectively, compared to the same period last year. The higher NPI was due to the contribution from one nursing rehabilitation facility acquired in February 2018, higher rent from the Singapore properties, and Japenese yen appreciation. Yet, distribution per unit (DPU) declined 3.5% compared to the same period last year, to 12.87 cents. Excluding a one-off distribution of divestment gain last year, DPU would have increased by 3.9%.

Yong Yean Chau, chief executive officer of the manager, commented on the REIT’s outlook:

“With healthy fundamentals in place, underpinned by supportive demographic trends and the higher demand for better quality healthcare and aged care services, the longterm outlook of the healthcare industry in Asia remains strong. Nonetheless, we remain cautious and vigilant given the current uncertainties in the macro economy and volatility in the financial markets. We will continue to adopt prudent financial risk management to manage our exposure to interest rate and foreign currency risks, in order to enhance the defensiveness of our portfolio.”

As of 31 December 2018, the REIT’s gearing stood at 36.1%, and its committed occupancy rate stood at 100%.

The next REIT on the list is BHG Retail REIT (SGX: BMGU), which focuses on retail malls in China and currently has a portfolio of five properties. Its sponsor is China-listed Beijing Hualian Department Store Co. Ltd, which is part of the Beijing Hualian Group, one of China’s largest retail operators.

For the year ended 31 December 2018, BHG REIT reported that gross revenue grew 8.0% year on year to S$69.7 million, while net property income (NPI) improved by 6.3% to S$45.6 million.

However, distribution per unit (DPU) declined 5.7% year on year to 5.16 Singapore cents. The lower DPU was mainly due to an increase in units issued. As of 31 December 2018, the REIT’s gearing ratio and occupancy rate stood at 30.7% and 98.7%, respectively.

Chan Iz-Lynn, chief executive officer of BHG REIT, commented:

“Gross revenue and net property income (“NPI”) for FY 2018 grew 8.0% and 6.3% respectively year-on-year. Based on the closing price of S$0.715 as at 31 December 2018, and aggregated distribution per unit (“DPU”) for FY 2018 of 5.16 Singapore cents, BHG Retail REIT’s annual distribution yield of 7.2%1 continues to represent an attractive long-term yield-play investment.

At the property level, our malls continued to exhibit healthy leasing demands. Portfolio committed occupancy rate was 98.7% as at 31 December 2018. Rents for new and renewed leases continued to achieve very healthy rental reversions for new and renewed leases, as well as in-built rental escalation for ongoing tenancies. This was achieved through dedicated efforts to continually enhance the quality and popularity of our malls and to entrench our malls as the mall of choice for tenants and the surrounding communities.”

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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 Parkway Life REIT.