These 2 REITs Reported 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. Suntec Real Estate Investment Trust (SGX: T82U) released its 2017 first quarter results just last week.
Suntec REIT is one of the largest REITs in Singapore and it currently has interests in retail malls and offices in Singapore and Australia. Its portfolio, which is concentrated more toward Singapore, includes Suntec City, One Raffles Quay, a commercial building in Australia and a 25% stake in Southgate Complex in Melbourne, just to name a few.
In the first quarter of 2017, Suntec REIT’s gross revenue grew 12.9% year-on-year while net property income stepped up by 14.6%. This eventually led to a 2.3% increase in distribution per unit. Chan Kong Leong, the chief executive officer of Suntec REIT’s manager, commented on the REIT’s performance:
“Notwithstanding the uncertainties in the macroeconomic environment and challenging operating conditions, we are pleased to have delivered a higher distributable income and DPU for the first quarter of 2017. Our asset in Sydney, 177 Pacific Highway, which received practical completion in August 2016, contributed to our robust performance this quarter.”
In its earnings release, Suntec REIT also provided some thoughts on its future performance. It said that the “Singapore office market is expected to remain under pressure given the impending office supply and shadow space.” It added that “market sentiments for the Singapore retail sector remained weak in the first quarter of 2017 as retailers continued to consolidate poorer performing outelts.”
2. Next up we have Mapletree Industrial Trust (SGX: ME8U), a REIT which focuses on the industrial real estate sector in Singapore. As of 31 March 2017, it has 86 properties in its portfolio that are collectively valued at S$3.7 billion.
Last week, Mapletree Industrial Trust released its fourth quarter and full year earnings for its financial year ending 31 March 2017 (FY16/17). During the quarter, the REIT’s gross revenue and net property income climbed 4.5% and 6.4% year-on-year. Its DPU was also up 1.8%.
Regarding its future, the REIT expects the Hi-Tech Buildings segment to be a “significant growth driver.” But, Mapletree Industrial Trust also cautioned that there is likely to be pressure on rental and occupancy rates for industrial properties in Singapore due to supply and movement of tenants.