Its earnings season again. Real estate investment trusts (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 performance in their latest earnings updates.
Let’s start with Parkway Life REIT (SGX: C2PU). As a quick background, Parkway Life REIT is one of the largest listed healthcare REITs in Asia by asset size. The REIT has ownership over three private hospital properties locally and hold stakes in 46 healthcare-related assets in Japan. It also has strata-titled units/lots in Gleneagles Intan Medical Centre in Malaysia.
For the first quarter ended 31 March 2019, gross revenue grew 2.1% to S$28.4 million while net property income (NPI) improved by 2.2% to S$ 26.5 million, respectively, as compared to the same period last year. The higher NPI was due to a new acquisition, higher rent from the Singapore properties, and Japenese Yen appreciation. Similarly, distribution per unit (DPU) was up by 3.5% as compared to the same period last year to 3.28 cents.
Yong Yean Chau, Chief Executive Officer of the REIT’s Manager, commented:
“We are pleased with the positive start for the year for PLife REIT. We have continued to grow our DPU achieving stable returns for our Unitholders even amid uncertain market conditions. In addition, we have bolstered our capital structure by pro-actively refinancing our JPY loans, optimising our debt profile and cost of borrowings. Notwithstanding that PLife REIT is well-positioned to benefit from the resilient growth of the healthcare industry, we remain cautious and vigilant given the macroeconomic uncertainties and will continue to be prudent in managing financial risks. We will also continue to pursue strategic opportunities for PLife REIT to deliver sustainable, long-term growth for our Unitholders.”
As of 31 March 2019, the REIT’s gearing stood at 36.4% and its portfolio’s committed occupancy rate was 100%.
The next REIT on the list is Mapletree Logistics Trust (SGX: M44U). As a quick introduction, Mapletree Logistics Trust, or MLT, owns 141 logistics properties around Asia-Pacific region that includes Singapore, Hong Kong, Japan, China, South Korea, Australia and others.
In the latest quarter ended 31 March 2019, MLT reported that gross revenue grew 13.0% to S$121.4 million while NPI jumped 15.0% to S$105.0 million. Also, DPU was up by 4.5% year-on-year to 2.024 cents, mainly due to the higher net property income. The 5.0% year-on-year 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 its existing portfolio as well as contributions from new acquisitions.
Ng Kiat, Chief Executive Officer of MLT’s manager, commented:
“We cap off a busy year with continued growth in 4Q to deliver a higher full year DPU of 7.941 cents. Post year-end, we divested five older properties in Japan with limited growth potential as part of our portfolio rejuvenation strategy. We will continue to work on improving the quality of the portfolio and drive leasing and asset management to deliver sustainable returns.”
As of 31 March 2019, the REIT’s gearing was 36.2% while its occupancy rate stood at 98.0%.
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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 Mapletree Logistic Trust and Parkway Life REIT.