Most S-REITs have reported their earnings result for 1Q18. In this roundup series, we kick off with a scorecard of the best-performing S-REITs. Among the universe of S-REITs, here are four touted to have bested expectations.

Investors Takeaway: Top Performing REITs Of The Quarter

  1. Ascendas REIT


Ascendas REIT (Ascendas) has always been a stable REIT with steadfast performance. This quarter, It showed its stable performance once again with another healthy performance aided by acquisition contributions and organic growth.

In the past year, A-REIT has been deepening its presence in Australia with new acquisitions. Australia now accounts for 15 percent of its total portfolio following new acquisitions. CIMB foresees the Australia market to remain as a near-term focus for acquisitions for A-REIT. Apart from that, there is also a possibility that A-REIT sees some asset injections in Singapore from its sponsor.

RHB notes that the REIT remains a prime beneficiary of the expected turnaround in Singapore’s industrial sector. Demand-supply dynamics remain the most favourable for the business park segment, followed by the high-tech industrial space as supply continues to taper into 2019.

BUY, TP $2.95

REIT Quarterly Scorecard Rating: A

  1. CapitaLand Commercial Trust

CapitaLand Commercial Trust’s 1Q18 was largely in line with consensus expectations as it rides on improving sentiments for office space in Singapore. While 1Q18 gross revenue and net property income grew year-on-year, CapitaLand Commercial Trust’s divestments of One George Street, Golden Shoe Car Park and Wilkie Edge will lead to lower income in the future quarters.

In terms of acquisition opportunities, CapitaLand Commercial Trust currently holds the call option to acquire the balance 55 percent interest in the commercial component of CapitaSpring. However, CapitaLand Commercial Trust’s management has also set sights on acquiring core assets in selected global gateway cities across development markets by leveraging on CapitaLand’s (sponsor) overseas platform.

BUY, TP $2.09

REIT Quarterly Scorecard Rating: A

  1. Mapletree Commercial Trust

While Mapletree Commercial Trust’s quarterly revenue was only slightly higher year-on-year, Mapletree Commercial Trust managed to exceed distribution per unit (DPU) expectations. This is largely due to Vivocity’s continued splendid performance with step-up rents in existing leases and higher income from completed asset enhancement initiatives (AEIs).

Moving forward, CIMB expects Mapletree Commercial Trust’s earnings to remain stable with support from improved portfolio occupancy, good performance of VivoCity and new earnings from completion of an ongoing AEI at B1 of Vivocity. Mapletree Commercial Trust’s contributions from office portfolio should also improve in the medium term led by the office upcycle.

BUY, TP $1.75

REIT Quarterly Scorecard Rating: A

  1. Mapletree Logistics Trust


Mapletree Logistics Trust saw its DPU grew by 4.1 percent year-on-year following a slew of positive activities including organic growth from existing properties, Tsing Yi acquisition and initial contribution from the redeveloped 76 Pioneer Road.

Mapletree Logistics Trust also proposed the acquisition of a 50-percent stake in 11 properties in China from its sponsor at 6.4 percent net property income yield. Out of the 11 properties, four properties are located in the mid-west region, seven in the eastern region and one in Tianjin. To fund the acquisition, the manager will be looking to equity fundraising.

According to CIMB, the main benefit of the acquisition is the addition of e-commerce or e-commerce-related companies, such as (accounts for about 21 percent of acquisition portfolio income) and Cainiao (logistics arm of Alibaba; about 19 percent of income) into Mapletree Logistics Trust’s tenant base. These e-commerce players are aggressively expanding into Southeast Asia, which gives Mapletree Logistics Trust the opportunity to leverage the network effect and cross-sell its warehouses in countries such as Vietnam.

BUY, TP $1.39

REIT Quarterly Scorecard Rating: A+

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