Results for two Reits paint different scenarios

Source : Straits Times – 24 Jul 2009

TWO real estate investment trusts (Reits) – CapitaRetail China Trust (CRCT) and Ascott Residence Trust (ART) – posted sharply differing second-quarter results yesterday.

ART’s distributable income lost 17 per cent to $11 million while CRCT’s gained 14.2 per cent to $12 million, compared to the second quarter last year.

CRCT owns eight retail malls in China. Its first-half distributable income was $25.3 million, a 31 per cent rise from last year. First-half distribution per unit (DPU) went up by 25.5 per cent to 4.08 cents. Its second-quarter DPU gained 0.24 cent to 1.94 cents. Unitholders will be paid on Sept 25.

Second-quarter gross revenue rose by 15.4 per cent to $30.4 million, due to a stronger yuan and higher occupancy in Shanghai’s Qibao Mall and Xinwu Mall in Anhui province. First-half gross revenue rose 23.4 per cent to $60.8 million.

Rental reversions were stable, with 79 new leases and renewals signed at 0.3 per cent below previous rental rates. It has locked in over 90 per cent of gross rental income with committed leases.

CRCT Management chairman Victor Liew said the firm was ‘confident in providing our unitholders with a sustainable and stable distribution for 2009′, adding it would benefit from the anticipated Chinese economic recovery.

ART, which owns serviced apartments in countries such as Singapore, Japan and the Philippines, suffered a 20 per cent fall in first-half distributable income to $21.9 million. Its second-quarter DPU lost 18 per cent to 1.79 cents, and first-half DPU fell 21 per cent to 3.55 cents. The distribution date is Aug 28.

Gross second-quarter revenue fell 7 per cent to $43 million and first-half revenue slid 7 per cent to $85.1 million, as business travel cuts and oversupply in Beijing and Shanghai weakened demand for serviced residences in Singapore and China.

‘The global economic downturn continues to impact the Asian hospitality industry,’ said ART Management chairman Lim Jit Poh, adding that ‘there are early signs that the decline in hospitality demand is levelling out’.

ART expects a profit from this year’s operating performance but less than last year’s.

CRCT units gained two cents to close at $1.23 and ART units gained 1.5 cents to close at 84 cents.