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REIT 1Q19 Report Card: 3 Industrial REITs That Are Outperformed

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In this 4-part series, we will dissect the quarterly performances of local-listed REITs/Business Trusts in the latest earnings quarter. In this first part, we focus on the three industrial REITs that have outperformed in the sector.

Investors Takeaway: 3 Industrial REITs That Are “Outperforming” S-REITs

In this 4-part series, we will dissect the quarterly performances of local-listed REITs/Business Trusts in the latest earnings quarter. In this first part, we focus on the three industrial REITs that have outperformed in the sector.

  1. Ascendas REIT

FY19 marked a year of stability and firm growth for Ascendas REIT (A-REIT). According to DBS, growth momentum for A-REIT continued into 4Q19 as gross revenue rose 4.3 percent year-on-year, underpinned by new acquisitions in the UK, Australia and two new redevelopment projects in Singapore.

The new acquisitions augment A-REIT’s resilience and growth, churning out stable cashflow for the REIT. Overseas acquisitions have also helped A-REIT to enhance its income visibility and growth through built-in rent escalations.

DBS has likened A-REIT to a Chanel bag in a lady’s wardrobe where A-REIT is a must-have for any investor. While DBS notes that valuation of A-REIT is at a premium, DBS remains confident that A-REIT has the ability to deliver consistent returns across market cycles.

1Q19 Performance Rating: A; BUY TP $3.20

  1. Mapletree Industrial Trust

With contributions from development projects and acquisitions, Mapletree Industrial Trust managed to offset higher borrowing costs for the acquisition of 18 Tai Seng and the development of Mapletree Sunview 1. This helped Mapletree Industrial Trust to finish 4Q19 on a strong note. The quarter itself formed 26 percent of CIMB’s FY19 estimates, helping the trust to outperform CIMB full-year forecast.

Moving forward, the manager of Mapletree Industrial Trust has expressed its openness towards data centres and does not rule out further acquisitions or build-to-suit developments. CIMB notes that the remaining 60 percent stake in its 14 US data centres from its Sponsor could be a natural extension to data centre exposure.

With visible growth profile from acquisitions and redevelopments, Mapletree Industrial Trust continues to be one of the top picks for CIMB.

1Q19 Performance Rating: A-; BUY TP $2.25

  1. Mapletree Logistics Trust

Mapletree Logistics Trust reported a solid set of 4Q19 results with a commendable $0.0204 DPU in 4Q19. This represented a 4.5 percent increase year-on-year, arising from both revenue and net property income improving 13 percent and 15 percent respectively.

During 4Q19, Mapletree Logistics Trust also made a few well-timed accretive acquisitions and redevelopments. While this resulted in higher borrowings, the acquisitions and redevelopment moves underpinned the strong 22.2 percent uplift in distributable income.

Besides that, Mapletree Logistics Trust also did a good job in sustaining its high occupancy rate in 4Q19. Overall occupancy continues to stay at a high level of 98 percent with higher take-up rates in Korea and Singapore. The rest of its other core markets of Hong Kong, Malaysia, Australia, Vietnam are fully occupied.

Having reported the sale of five properties in Japan, unitholders can expect to receive increased distributions over the next eight quarters. The manager also plans to re-invest the proceeds to drive accretive acquisitions by tapping onto an active pipeline from the Sponsor and a myriad of opportunities from third parties across its key operating markets.

1Q19 Performance Rating: A-; BUY TP $1.60

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