Here Are 2 REITs That Have Delivered Growth in Their Latest Quarterly Earnings
We’re in the earnings season again!
With the Straits Times Index (SGX: ^STI) near a 52-week high, investors may be wondering whether the results of stocks in Singapore are good or bad. For the following two REITs at least, the first quarter of 2017 saw them report a stronger business performance:
1. CapitaLand Commercial Trust (SGX: C61U) released its 2017 first quarter earnings last week.
As a quick background, CapitaLand Commercial Trust, which is managed by CapitaLand Limited (SGX: C31), is one of the largest commercial real estate investment trusts in Singapore by market capitalization. The REIT has 10 commercial properties (all located in Singapore) in its portfolio. Some of them are Capital Tower, Six Battery Road, and Raffles City.
During the quarter, the REIT saw its gross revenue and net property income jump by a strong 33.9% and 34.3%. This subsequently led to a 9.6% increase in its distribution per unit. CapitaLand Commercial Trust also ended the quarter with an occupancy rate of 97.8%, higher than the occupancy rate of 95.6% for Singapore’s CBD (central business district) office rental market.
However, the REIT commented in its earnings release that the net property income of some of its properties “are expected to soften in the later part of 2017 as more renewals and new leases are committed below expiring rents.”
2. Next up we have First Real Estate Investment Trust (SGX: AW9U), which released its 2017 first quarter earnings last week.
During the quarter, the REIT experienced a 2.5% year-on-year increase for both its gross revenue and net property income. Its distribution per unit followed suit with growth of 1.4%.
As a quick introduction, First REIT is a healthcare-focused real estate investment trust. It currently has a portfolio of 18 properties (14 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.
First REIT’s growth during the quarter was aided by its December 2016 acquisition of the Siloam Hospitals Labuan Bajo for S$20 million. It’s worth noting that Lippo Karawaci still has a pipeline of over 40 hospitals – these are potential acquisition targets for First REIT in the future.
Looking ahead, First REIT commented:
“Meanwhile, the healthcare sector remains supported by the ongoing national health insurance scheme, which now allows more affluent Indonesians to supplement coverage under the scheme with private health insurance, lending further weight to private healthcare spending.”