Its earnings season again!
REITs have always been a favourite investment choice for risk-adverse investors because of their stable earnings qualities.
Today, let’s look at two REITs that have lived up to investors’ expectations by delivering positive performances in their latest earnings updates.
We’ll start with CapitaLand Mall Trust (SGX: C38U), which currently has 15 properties located in the suburban areas and downtown core of Singapore, including Tampines Mall, Junction 8, Funan, IMM Building, Plaza Singapura, Bugis Junction, and others.
For the quarter ended 31 March 2019, CMT reported that gross revenue was up 10.0% year on year to S$192.7 million. Similarly, net property income grew 11.5% year on year to S$140.1 million. The year-on-year improvement in gross revenue and NPI (net property income) was thanks to acquisition as well as higher rental income from certain properties. Consequently, distribution per unit grew 3.6% year on year to 2.88 Singapore cents.
Tony Tan, CEO of the REIT’s manager, commented:
“We are pleased to start the year with a set of stable results in 1Q 2019. This is largely attributable to the 100% contribution from Westgate to CMT’s revenue, following the completion of our acquisition of the balance 70.0% interest in Westgate last November. We expect Funan, opening in mid-2019 and about 90% leased, to contribute progressively to CMT’s earnings from 2H 2019.”
As of 31 March 2019, the retail REIT clocked in a gearing ratio of 34.4%, while its occupancy rate stood at 98.8%.
The next REIT on the list is Keppel-KBS US REIT (SGX: CMOU), which invests primarily in income-producing commercial and real estate assets in key growth markets of the US. Currently, it has 13 office properties located in seven key growth markets in the US.
In the latest quarter ended 31 March 2019, Keppel-KBS reported that gross revenue increased by 24.2% year on year to US$29.4 million. Similarly, net property income rose by 23.7% to S$18.2 million. Consequently, distribution per unit (DPU) was up by 30.4% on an adjusted basis to 1.5 US cents. The stronger performance was driven by new acquisitions made by the REIT in November 2018 and January 2019, as well as positive rental reversions.
Looking ahead, here’s what the REIT’s manager said:
“Against the backdrop of a challenging global macro-economic environment, KORE will continue to pursue its strategy of optimizing its assets and strengthening its income stream. The Manager remains focused on delivering long term value and stable distributions to Unitholders and will continue to grow KORE through its primary investment and management strategies of portfolio optimization, value accretive acquisitions, and prudent capital management.
“Leveraging rising office rents in the submarkets where KORE operates, the Manager will also seek to capture rental escalations and positive reversions as leases expire. At the same time, the Manager will seek opportunistic acquisitions of quality income-producing properties in first choice submarkets with positive economic and office fundamentals.”
As of 31 March 2019, the REIT’s gearing stood at 38.1%, while its committed occupancy rate stood at 92.1%.
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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 Capitaland Mall Trust.