Last Friday, BHG Retail REIT (SGX: BMGU) announced its 2019 first-quarter result. As a quick introduction, BHG Retail REIT is a real estate investment trust that focuses on retail malls in China with a portfolio of five malls.
Let’s look at 10 important things from the earnings announcement that investors should know:
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- Gross revenue grew 2.6% year-on-year to S$17.9 million, while net property income (NPI) improved by 1.6% to S$11.8 million.
- Yet, distribution per unit (DPU) declined 20.9% year-on-year to 1.10 Singapore cents, mainly due to an increase in units issued.
- Gearing as of 31 March 2019 stood at 32.5%. REITs in Singapore have a regulatory gearing ceiling of 45%, so BHG Retail REIT has plenty of debt headroom given its low gearing.
- The committed occupancy rate of BHG Retail REIT’s portfolio stood at 98.5% at the end of the reporting quarter.
- The weighted average lease expiry stood at a healthy 3.8 years by gross rental income.
- Over 60% of the REIT’s gross rental income, and close to 80% of its net lettable area (NLA) came from tenants that are in the experiential segments.
- Based on BHG REIT’s annualised DPU of 4.40 Singapore cents and its unit price of S$0.73 (as of writing), the REIT has a trailing distribution yield of 6.0%.
- China’s economy grew by 6.4% year-on-year for the quarter while its retail sales growth was up 8.3% year-on-year in this period.
- Disposable income and expenditure per capita for urban residents in China increased by 7.9% and 6.1%, respectively, for the current quarter.
- Chan Iz-Lynn, Chief Executive Officer of BHG REIT’s manager, commented:
“BHG Retail REIT’s portfolio of community malls delivered another set of robust operational performance during the quarter. Portfolio occupancy rate was 98.5% as at 31 March 2019. Our multi-tenanted malls continued to observe healthy leasing demands as well as strong rental uplift from existing and new tenants. Notwithstanding this, the Manager is not resting on its laurels. We will continue to create organic value through asset enhancement initiatives, and actively pursue potential acquisition growth opportunities, so as to deliver long-term attractive yield to our unitholders.”
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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.