[SINGAPORE] Diversified real estate investment trusts (Reits) make up the largest portion of Singapore’s Reit market, with over a quarter of the actively traded counters holding a mixture of assets across multiple sub-sectors.
The 10 Singapore-listed Reits (S-Reits) that adopt a diversified strategy are exposed to different market segments – including industrial, retail, office and hospitality assets – offering Reit managers greater flexibility to build portfolios that are resilient while having the opportunity for growth. Such diversification may also be preferred by some investors, who seek broader exposure across different sectors to mitigate against any potential slowdowns in a single sector.
The largest diversified S-Reits in the Singapore market have outperformed in the year-to-date. Three such Reits on the Straits Times Index (STI) rank among the top 10 gainers in the iEdge S-Reit index for the year up till Mar 13.
CapitaLand Integrated Commercial Trust (CICT) is the largest S-Reit in Singapore, and it holds a diversified exposure including office and retail assets. For the year till Mar 13, its units have climbed 9.3 per cent – ranking it third in the iEdge S-Reit index.
CICT’s net property income grew by 3.4 per cent on year to S$1.2 billion in FY2024. Distribution per unit also increased 1.2 per cent to S$0.1088 in FY2024. This performance was driven by higher gross rental income and lower operating expenses, despite the absence of rental income from Gallileo undergoing asset enhancement initiatives (AEI) and the divestment of 21 Collyer Quay.
As at Dec 31, 2024, all three of CICT’s business segments – retail, office and integrated development – saw sequential improvements in committed occupancy rates from the previous quarter. The trust continues to monitor the market for portfolio reconstitution opportunities, but said it would maintain a disciplined approach and be predominantly Singapore focused. The manager will also regularly review AEI opportunities based on asset attributes and growth potential.
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Smaller S-Reits
Other STI Reits that hold a diversified exposure include Mapletree Pan Asia Commercial Trust (MPACT) and Frasers Logistics & Commercial Trust, which have climbed 2.5 and 2.3 per cent, respectively, for the year-to-Mar 13.
MPACT’s manager noted in its Q3 FY2025 results that stable Singapore performance had moderated the impact of overseas headwinds. The Reit posted revenue of S$223.7 million in the quarter, down 7.4 per cent year on year amid lower overseas contributions, which were further dampened by the persistently strong Singapore dollar. However, the portfolio’s Singapore assets showed resilience with combined gross revenue (excluding Mapletree Anson) up 0.2 per cent on year, driven by VivoCity’s robust performance despite ongoing AEIs.
Outside the STI, other diversified S-Reits include Suntec Reit, OUE Reit, Lendlease Global Commercial Reit, CapitaLand China Trust, CapitaLand India Trust, IReit Global, and Stoneweg European Reit.
OUE Reit posted revenue of S$295.5 million in FY2024, up 3.7 per cent on year amid stable operational performance of the Singapore office portfolio and strong performance of hospitality assets. Amount available for distribution in H2 FY2024 grew 8 per cent on year, to S$62.4 million, despite higher finance costs. The distributable amount also included the release of the remaining S$2.5 million capital distribution from the partial divestment of OUE Bayfront.
The Reit’s office assets saw committed occupancy remain healthy at 94.6 per cent as at Dec 31, 2024, with positive rental reversion of 10.7 per cent for FY2024. Its hospitality segment revenue surged 8.9 per cent on year to S$105.9 million, driven by the robust concert and Mice (meetings, incentives, conferences and exhibitions) pipeline in the first half of 2024, as well as continued improvement in visitor arrivals throughout the year.
OUE Reit will continue to monitor portfolio reconstitution opportunities to unlock value amid improved capital market sentiment. It aims to increase revenue contributions from the hospitality segment to 40 per cent, from under 35 per cent currently, while reviewing opportunities in key gateway cities such as Melbourne, Australia and Hong Kong.
As at Mar 13, the 10 diversified S-Reits maintained an average distribution yield of 7.6 per cent, ranking the sub-sector ahead of the broader S-Reit market. Their average price-to-book ratio also stood at 0.7, slightly below the S-Reit average of 0.8.
The writer is a research analyst at SGX.
For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.
