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2 Billion-Dollar REITs That Have Delivered Growth Recently

Its earnings season again! REITs have always been one of the favourite investment choices for risk-averse investors due to their stable earnings qualities and reliable tax-free income. In this article, I’ll look at two REITs that have lived up to their investors’ expectations by delivering positive performances in their latest earnings updates.

SPH REIT

We will start with SPH REIT (SGX: SK6U).

As a quick introduction, SPH REIT is an owner of two retail malls in Singapore, namely, Paragon and Clementi Mall. It also owns a leasehold interest in The Rail Mall. 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, although the former has run into its own troubles.

Ms Susan Leng, CEO of SPH REIT Management Pte. Ltd, said:

“SPH REIT continues to maintain high occupancy and delivers stable distribution. We are pleased to report the overall portfolio registered a positive rental reversion of 8.4% for YTD 3Q FY19, supported by growth in overall tenant sales. For this quarter we also benefited from the contributions from The Rail Mall and Figtree Grove Shopping Centre, which we acquired in 2018.

The tourist arrivals and spend for 2018 ended on a positive note and we believe Paragon would stand to benefit with this trend. The Clementi Mall is well poised in the suburban to continue to serve its immediate catchment. The Rail Mall is a unique cluster of shop units, with opportunity for us to further strengthen its current F&B mix and create a differentiated positioning for the asset. Our focus remains to drive long-term value of our properties and deliver sustainable returns for our unitholders.”

For the quarter ended 31 May 2019, SPH REIT reported that distribution per unit (DPU) grew 1.5% year-on-year to 1.39 cents. The higher DPU came in as a result of better performance. Here are some numbers: Gross revenue grew by 12.7% year-on-year to S$58.3 million. Similarly, net property income improved by 14.2% to S$46.3 million. The stronger performance was due to two new acquisitions – The Rail Mall and Figtree Grove Shopping Centre.

As of 31 May 2019, the REIT clocked in a gearing ratio of 30.1% while its occupancy rate stood at 99.0%.

Mapletree Industrial Trust

The next REIT on the list is Mapletree Industrial Trust (SGX: ME8U), or MIT, which is a popular choice for those of us interested in long-term income generation. As a quick introduction, MIT has 87 industrial properties and 14 data centres in the US (through its 40% joint venture).

Mr Tham Kuo Wei, Chief Executive Officer of MIT’s REIT manager, made the following comments:

“We have delivered another set of robust financial results with our well-timed investments within the Hi-Tech Buildings segment. In Singapore, we will be redeveloping the Kolam Ayer 2 Flatted Factory Cluster into a high-tech industrial precinct to unlock value for the portfolio and utilise untapped plot ratio. The Hi-Tech Buildings segment will continue to underpin our efforts to strengthen MIT’s growth profile.”

For the quarter ended 30 June 2019, MIT’s gross revenue grew 8.8% year-on-year to S$99.6 million while net property income improved by 12.2% year-on-year to S$77.9 million. The improvement was primarily due to new revenue contributions from 18 Tai Seng, 30A Kallang Place and Mapletree Sunview 1. Similarly, the REIT’s distribution per unit (DPU) was up by 3.3% year-on-year to 3.10 cents.

As of 30 June 2019, the REIT’s gearing stood at 33.4% and its committed occupancy rate stood at 90.8%.

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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 has recommended the shares of Mapletree Industrial Trust.