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2 REITS That Have Delivered Positive Performances Recently

It’s earnings season again! Given many REITs are 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 positive financial results.

Let’s start with SPH REIT (SGX: SK6U). As a quick introduction, SPH REIT is an owner of retail malls mainly in Singapore. It owns Paragon, The Clementi Mall, and The Rail Mall here. In Australia, SPH REIT owns an 85% stake in Figtree Grove Shopping Centre. Newspaper publisher Singapore Press Holdings Limited (SGX: T39) is the sponsor, manager, and a large unitholder of SPH REIT.

For the quarter ended 28 February 2019, gross revenue grew by 8.5% year-on-year to S$58.1 million. Similarly, net property income improved by 8.5% to S$45.9 million. The stronger performance was due to two new acquisitions — The Rail Mall and Figtree Grove Shopping Centre. Distribution per unit (DPU) was marginally higher at 1.41 cents, up by 0.7% as compared to last year.

As of 28 February 2019, the REIT clocked in a gearing ratio of 30.1% while its occupancy rate stood at 99.2%.

Susan Leng, CEO of SPH REIT’s manager, said:

“SPH REIT continues to maintain high occupancy and delivers stable distribution. The overall portfolio registered a positive rental reversion of 8.4% for 1H 2019 supported by growth in overall tenant sales.

On 21 December 2018, SPH REIT completed the acquisition of 85% stake in Figtree Grove Shopping Centre, an established sub-regional shopping centre in Wollongong, New South Wales, Australia. Tenant sales at Figtree Grove Shopping Centre was 47.7% above benchmark for malls in the same category as reported by the independent national valuer, m3 Property Pty Ltd. The acquisition of this quality asset is in-line with our strategy to acquire yield-accretive retail properties. We continue to seek opportunities to enhance our properties and create long-term sustainable value for our unitholders.”

The next REIT on the list is CapitaLand Commercial Trust (SGX: C61U) or CCT. As a quick introduction, CCT is one of the largest commercial REITs in Singapore by market capitalisation.

For the quarter ended 31 March 2019, CCT reported that gross revenue grew 3.5% year-on-year to S$99.8 million while net property income (NPI) improved by 3.4% as compared to the same period last year to S$79.8 million. The higher NPI was due to a new acquisition, as well as higher occupancy at one of its existing properties. Similarly, the REIT’s DPU was up by 3.8% year-on-year to 2.20 cents.

As of 31 March 2019, the REIT’s gearing stood at 35.2% while its committed occupancy rate stood at 99.1%.

Kevin Chee, Chief Executive Officer of the REIT’s manager, commented on the latest results:

“We are pleased to report that CCT achieved a DPU of 2.20 cents in 1Q 2019 and maintained a strong portfolio occupancy rate of 99.1% as at 31 March 2019. The Trust delivered a strong set of results from its strategic portfolio reconstitution achieved by the acquisition of a 94.9% stake in Gallileo and the divestment of Twenty Anson, which mitigated the flow through of negative rental reversions from leases committed last year.

This resilient performance was further underpinned by CCT’s proactive asset and capital management.”

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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 Singapore recommended the shares of CapitaLand Commercial Trust.