Here Are 2 REITS That Have Delivered Mixed Performances Recently
We are still in midst of earnings season.
As always, there will be some real estate investment trusts (REITs) posting growth, and some experiencing declines. And then, there is the third group – the mixed bags. Let’s take a look at two REITs that delivered mixed results:
1. Suntec Real Estate Investment Trust (SGX: T82U) reported its fourth quarter earnings in late last month.
As a quick introduction, Suntec REIT is one of the largest REITs in Singapore and currently has interests in retail malls and offices in Singapore and Australia. Its portfolio includes Suntec City, One Raffles Quay, and a commercial building in Sydney, just to name a few.
Gross revenue and net property income (NPI) for the quarter were down by 1.8% and 2.2% year on year, respectively. Yet, distribution per unit (DPU) was up by 0.3% compared to a year ago. DPU was boosted by capital distribution. The REIT’s portfolio had a committed occupancy rate of 99.2% and 98.8%, respectively, for its office and retail properties at end-2017.
Chan Kong Leong, Chief Executive Officer of the REIT Manager, had the following comments for the quarter:
“We are pleased to have delivered a higher distributable income for 2017. While the Singapore assets continued to provide steady income, the properties in Australia, 177 Pacific Highway and Southgate Complex contributed to our robust performance for the year.
In 2017, we expanded our footprint in Australia with the acquisition of a 50% interest in the premium-grade 477 Collins Street in Melbourne which is currently under construction. This is a strategic fit with our existing portfolio of high quality assets and enhances Suntec REIT’s income and geographical diversification.”
2. The next REIT on the list is Frasers Hospitality Trust (SGX: ACV).
As a quick introduction, Frasers Hospitality Trust is a stapled trust that comprises a real estate investment trust and business trust. It focuses mainly on hotels and serviced residences around the world. Right now, its portfolio consists of 15 properties located across nine cities in Asia, Australia, and Europe.
Ms Eu Chin Fen, Chief Executive Officer of the Managers, commented in the latest result announcement:
“Underpinned by our income diversification strategy, our first quarter performance has been resilient. We are pleased to have completed the renovation of Novotel Rockford Darling Harbour which will be relaunched next month.
“With our balance sheet strength and low gearing at 33%, we remain well-positioned to pursue accretive acquisitions for growth and asset enhancement initiatives to unlock value for our stapled security holders.”
In its latest quarter, gross revenue rose by 4.8% to S$41.5 million while net property income (NPI) improved by 3.1% to S$31.4 million as compared to same period last year. Yet, the REIT’s distribution per stapled security (DPS) was down by 1.1% year-on-year to 1.3107 cents due to an increase in distribution securities. The higher NPI came from improvements from all countries where the stapled security has a presence, with the exception of United Kingdom.