These 2 REITs Delivered Mixed Quarterly Earnings Recently
Earnings season is ending.
As is common with every earnings season, there will be some real estate investment trusts (REITs) posting growth, some REITs posting mixed numbers, and some REITs experiencing declines. For instance, Mapletree Commercial Trust (SGX: N2IU) and Frasers Centrepoint Trust (SGX: J69U) posted positive results. On the other side, Starhill Global Real Estate Investment Trust (SGX: P40U) and Cache Logistics Trust (SGX: K2LU) had weaker results.
Beyond the two groups, there is a third group that reported results that were neither strong nor weak. In other words, the results were mixed. We will look at two of these REITs today:
1. Parkway Life REIT (SGX: C2PU) delivered a mixed performance in its latest quarter.
As a quick introduction, Parkway REIT is one of the largest listed healthcare REITs in Asia by asset size. The REIT has 49 healthcare properties in Singapore, Malaysia and Japan.
For 2017’s third-quarter, gross revenue and net property income (NPI) were down by 1.4% and 1.2% year-on-year respectively. On the flipside, distribution per unit (DPU) increased 10.1% compared to a year ago. Parkway Life REIT’s DPU growth consisted of a 2.8% year-on-year increase in recurring operations, and a one-off 0.22 cents per unit distribution from investment gains. Recurring operations was up due to cost savings from its refinancing activities.
Chief executive of the REIT manager Yong Yean Chau commented:
“This quarter marks a special milestone for PLife REIT as we celebrate its tenth year anniversary since listing on 23 August 2007. Over the years, our strategic dedication to cultivate a quality asset portfolio with sound core fundamentals have enabled us to consistently deliver sustained DPU growth since IPO.
Today, with a well-diversified portfolio of 49 properties of approximately S$1.7 billion, PLife REIT remains one of Asia’s largest listed healthcare REITs by asset size and we are proud to celebrate our 10 years of Resiliency, Stability and Strength with our valued stakeholders, partners and Unitholders,”
2. Another REIT that had mixed results was Suntec Real Estate Investment Trust (SGX: T82U).
As a brief background, Suntec REIT is one of the largest REITs in Singapore. It has interests in retail malls as well as offices in Singapore and Australia. Its portfolio includes Suntec City, a one-third interest in One Raffles Quay, a commercial building in Sydney and a 25% stake in Southgate Complex in Melbourne, and more.
For its latest quarter, Suntec REIT’s gross revenue rose by 10.6% to $91.1 million and net property income (NPI) grew by 11.6% year-on-year to $63.9 million. Despite posting higher NPI, the REIT’s distribution per unit (DPU) declined 2.1% year-on-year.
Suntec REIT’s NPI benefitted from higher contribution from 177 Pacific Highway, Southgate Complex and Suntec Singapore. However, DPU declined as the REIT’s unit base increased by 95.7 million.
Chan Kong Leong, Chief Executive Officer of the REIT manager, commented:
“During the third quarter of 2017, we renewed and signed approximately 150,000 sq ft of leases reducing the 2017 leases expiring to only 2.0% of NLA. To-date, we have also reduced the leases expiring for 2018 to 14.9% of NLA. We will continue our proactive asset management to maintain the high occupancy level for our Singapore office.
We are pleased to have delivered a higher distributable income for the first nine months of 2017. Suntec REIT continues to reap the benefits from the diversification strategy into Australia. While the Singapore assets continued to deliver steady income, the properties in Australia, 177 Pacific Highway and Southgate Complex contributed to our robust performance this quarter.”