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2 Singapore REITS That Have Delivered Mixed Performances Recently

It’s earnings season again, and many companies have reported their results over the past few weeks. Some of them have had good news to share, some bad, and some companies’ results have landed somewhere in between.

Today we’re having a look at two REITs that have recently delivered mixed financial results.

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The first REIT on the list is First Real Estate Investment Trust (SGX: AW9U), or First REIT, 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. The REIT’s sponsor is Indonesia’s largest listed property company, PT Lippo Karawaci Tbk.

For the quarter ended 31 March 2019, First REIT’s gross revenue fell 0.2%, while its net property income (NPI) declined 1.4% compared to the same period last year. The lower NPI was primarily due to lower variable rental component for its Indonesian properties as well as increased property expenses. Distribution per unit (DPU) came in flat at 2.15 Singapore cents.

As of 31 March 2019, First REIT’s gearing and committed occupancy rate stood at 34.5% and 100%, respectively.

Victor Tan, asset manager of First REIT, made the following comment about the results:

“Despite a marginal decline in our rental income and NPI, the Trust continues to deliver stable returns to our Unitholders. Our gearing also remained steady at 34.5% as at 31 March 2019, giving us ample headroom for further yield-accretive acquisitions. Going forward, the Trust will continue to explore opportunities to unlock the value of our existing portfolio through asset enhancement initiatives or strategic divestment of assets for capital gains. With OUE Limited (“OUE”) and OUE Lippo Healthcare Limited (“OUELH”) on board, we will also look at diversifying our income streams by expanding into other geographical markets.”

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’s shopping malls are located in China, Hong Kong, and Macau.

Tan Tze Wooi, CEO of CRCT, commented:

“China’s economy expanded at an encouraging pace of 6.4% in 1Q 2019, with consumer demand showing signs of improvement. The fiscal stimulus rolled out by the Chinese government, which include business and individual tax cuts, is expected to boost consumer sentiments. These developments bode well for CRCT, which has sustained its growth momentum into the new year through proactive asset management and value enhancement initiatives. In 1Q 2019, CRCT’s tenants’ sales increased 9.8%, year-on-year, while shopper traffic grew 14.0%. Portfolio occupancy as at 31 March 2019 remained high, at 97.4%. This strong foundation will anchor CRCT’s performance as we forge ahead with our tenant remix strategy to draw more popular concepts.”

For the quarter ended 31 March 2019, gross revenue improved 1.1% to S$56.0 million, while net property income increased by 7.0% to S$39.8 million. The higher net property income was due to stronger rental growth and lower property expenses. However, distribution per unit (DPU) fell 5.8% year on year to 2.59 Singapore cents. Excluding capital distribution, DPU would have increased 2.0% to 2.49 Singapore cents.

As of 31 March 2019, the REIT’s gearing stood at 35.5% while its committed occupancy rate stood at 97.4%.

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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 First Real Estate Investment Trust and Capitaland Retail China Trust.