3 Best-Performing Hong Kong REITs

Hong Kong real estate investment trusts (REITs) are well-known as income-producing investments. Here’s a look at the top three REITs, in terms of total returns, in Hong Kong that have performed well since the start of the year through to 24 September 2019.

REIT #1: Link Real Estate Investment Trust

Link Real Estate Investment Trust (SEHK: 823) takes the top spot as the best performer of the lot. With a total return of 10.4% year-to-date, it has certainly given unitholders much to cheer about. Link REIT, as a quick background, is the largest listed REIT in Hong Kong with a portfolio of mainly retail properties located near public housing estates.

It’s not surprising to see Link REIT’s units performing very well, given its strong business and distribution per unit (DPU) growth over the years, as seen below.

Link REIT financials for FY 2018/2019

Source: Link REIT 2018/2019

REIT #2: Sunlight Real Estate Investment Trust

Sunlight Real Estate Investment Trust (SEHK:435), which has exposure to both the commercial and retail sectors, has produced a year-to-date total return of slightly below 9%.

Just like Link REIT, Sunlight REIT’s DPU has grown over the years. Since FY 2014/15, the REIT has managed to increase its DPU by 5.5% per annum, which is not too shabby.

Sunlight REIT dividends

Source: Sunlight REIT 2019 earnings results (Note: figures in HK cents)

At its current unit price of HK$5.29, it has a distribution yield of 5.2%.

REIT #3: Hui Xian Real Estate Investment Trust

Coming in third is Hui Xian Real Estate Investment Trust (SEHK: 87001) with a year-to-date total return of 8.4%. Hui Xian REIT is Hong Kong’s first RMB-denominated REIT with a portfolio spanning across retail malls, office buildings, serviced apartments, and hotels.

In its latest six-month financial period that ended on 30 June 2019, total revenue grew 0.2% year-on-year, but distributions to unitholders fell around 10%. The fall was largely due to a year-on-year decrease in interest income and a one-off exchange gain realised from an early bank loan repayment in the first half of 2018. Consequently, DPU tumbled 12%.

As for its outlook statement, the REIT said that “global economic uncertainties are expected to persist in the second half of 2019”, and that the “complex and fast-changing business environment presents both challenges and opportunities for Hui Xian REIT”.

Right now, Hui Xian REIT is one of the highest-yielding Hong Kong REITs with a distribution yield of 7.7%.

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