Added CRCT -$1.44.
Added StarHill - $0.67
Added First Reit - $1.30 (before XD)
CapitaLand Retail China Trust (CRCT) is focused in rental retail mall properties in China while Starhill Global REIT (SGR) is diversified across different countries such as Singapore, Malaysia, Australia, China and Japan and into not just retail but also office rental properties.
It depends on what an investor wants. If an investor prefers a more focused China retail mall play, then CRCT is suitable.
However, if an investor prefers a more diversified approach into both retail and office property play from different geographical regions, then the investment mandate of SGR will be suitable.
Both CRCT and SGR have strong sponsors and are prudent in their gearing so far.
I compare here the CAGRs of the standard metrics I have been using before in my earlier sharings for these two REIT/Trust over a period of 10 years from 2007 to 2017.
Please take this comparison only as a reference for your information and not as an absolute conclusion of their individual investment worthiness.
There are certainly more things that can be looked into for each of them to form a stronger opinion on their individual investment worthiness. Nevertheless, this comparison is a good starting point.
CAGRs (10 years period)
Gross revenue = SGR (8.13) CRCT (12.29)
Net property income = SGR (8.52) CRCT (12.36)
Distributable income = SGR (6.82) CRCT (11.03)
Value of investment properties = SGR (3.76) CRCT (12.94)
From the comparison above, we can see that CRCT has been growing the key metrics at a higher double digit CAGR than SGR which is a lower single digit CAGR. I checked on the unit price performance of SGR versus CRCT over the past 10 years period and found out that the latter also performed significantly better than the former.
It seems that CapitaLand Retail China Trust is a better investment candidate than Starhill Global Reit. However, we certainly can continue to investigate more to form an even better informed comparison between the two.
CRCT -. NAV $1.71, DPU of 10.1 cents. Yield is 7%.$1.44
Starhill - NAV 91 cents , DPU 4.38 cents, yield is 6.44% , 68 cents.
First REIT’s 2Q DPU edges up to 2.15 cents
Yield is about 6.5% base on closing price of $1.33.
Looks pretty stable and decent DPU that may likely provide another form of fixed income portfolio.
I think yield is much better than PW Life reit which is about 4.8%.
I think still has room for it to rise further towards a yield of 5.5% for a Target price of $1.56.
SINGAPORE – 17 July 2018 – Bowsprit Capital Corporation Limited (“Bowsprit”), the Manager of First Real Estate Investment Trust (“First REIT” or the “Trust”), today reported a 0.5% year-on-year (“y-o-y”) rise in distribution per unit (“DPU”) to 2.15 Singapore cents for the second quarter ended 30 June 2018 (“2Q 2018”), on the back of distributable income increasing 1.6% y-o-y to S$16.9 million.
For the quarter under review, gross revenue rose 5.3% y-o-y to S$28.9 million, while net property income (“NPI”) increased 5.0% to S$28.5 million. For the six-month period, gross revenue and NPI grew 5.5% and 5.4% to S$57.6 million and S$56.9 million respectively, while distributable income edged up 1.7% to S$33.8 million. As at 30 June 2018, First REIT’s gearing stood at 34.2% with interest cover at 4.9 times.
The Trust remained prudent with its capital structure and is exploring various financing options for its refinancing needs.
Key highlights in 2Q 2018
• DPU up 0.5% to 2.15 Singapore cents compared to 2.14 Singapore cents in 2Q 2017
• On an annualised basis and based on closing price of S$1.33 as at 29 June 2018, the latest distribution translated to a yield of 6.5%
• Secured a S$100 million term loan facility from CIMB Bank Berhad, Labuan Offshore Branch, with a tenure of six months and an option to extend for another six months. The loan was fully drawn down to refinance First REIT’s S$100 million Fixed Rate Notes due on 22 May 2018
Outlook
Indonesia’s gross domestic product grew 5.06%1 year-on-year in the first quarter of 2018, at a slower pace compared to the previous quarter, due mainly to sluggish consumption. To reduce reliance on domestic consumption, the Indonesian government has implemented several deregulation measures to attract more investment. Last year, Indonesia recorded 8.5% more foreign direct investment in Rupiah terms than in 2016.2 Meanwhile, rising interest rates in the US have weakened the Rupiah in recent weeks, causing Bank Indonesia to raise interest rates to support the Rupiah. However, this has no impact on the Trust’s borrowings as its loans are originated in Singapore and denominated in Singapore dollars.
BMI Research reported that healthcare spending in Indonesia amounted to Rp403.9 trillion in 2017 and projects it to rise to Rp1,224 trillion by 2027, and that healthcare spending per capita will more than double between 2017 and 20273 . Against this trend, together with the growing nationwide adoption of the national health insurance scheme, private healthcare demand will continue to rise. As such, First REIT remains well-positioned for further growth, with a strong acquisition pipeline of around 40 hospitals in Indonesia from its Sponsor, PT Lippo Karawaci Tbk
Distribution Reinvestment Plan ("DRP") The DRP will not be applicable for this quarter.
All Unitholders will be receiving 2Q 2018 DPU of Singapore 2.15 cents in cash, payable on 24 August 2018. The Manager may consider applying the DRP at a later date and Unitholders will be notified accordingly.
TA wise, MACDd & Stoch is showing sign of a positive divergence and it may likely continue to rise higher.
Looks like the same chart patterns may likely repeat itself and rises higher towards $1.40 .
