Bulk of S-Reits in key global real estate indices

THE FTSE EPRA Nareit Global Real Estate Index Series, designed to represent general trends in eligible real estate equities worldwide, is a widely followed global benchmark with an estimated US$340 billion of assets under management actively benchmarked or passively tracking the indices.

The indexes are built by FTSE Russell, together with the European Public Real Estate Association (EPRA) and the National Association of Real Estate Investment Trusts (Nareit).

A company is eligible if it derives at least 75 per cent of Ebitda from relevant real estate activities, including ownership, trading and development of income-producing real estate. Other criteria include its size as well as liquidity.

As of end 2020, there are 23 SGX-listed real estate related equities in the index series, which includes 19 S-Reits and property trusts. These 19 trusts have a combined market capitalisation of over S$90 billion, representing close to 80 per cent of the S-Reits and property trust sector in Singapore. They generated an average 5.3 per cent total returns in year-to-date (YTD) 2021 till April 15, reversing an average decline of 4.3 per cent total returns in 2020.

The two recent additions to the index series include Ascott Residence Trust, in June 2020, and Parkway Life Reit, in September 2020. Five S-Reits (Frasers Logistics & Commercial Trust, Frasers Centrepoint Trust, Keppel DC Reit, Manulife US Reit and Sasseur Reit) entered the index series back in 2019.

Ascott Residence Trust (ART), the largest hospitality trust listed on the SGX, has an asset value of S$7.2 billion as at Dec 31, 2020 with properties in 38 cities worldwide. Given Covid-19 headwinds in the hospitality industry, ART's FY2020 gross profit declined 41 per cent to S$149.6 million. However, the trust manager noted that its properties with a larger proportion of long stays in markets such as China and Vietnam have outperformed other markets that are dependent on transient travellers. It also believes that there is significant pent-up demand for travel and that domestic, leisure and free independent segments are expected to continue to lead the recovery.

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Recently, to enhance the stability of its portfolio, ART expanded its investment mandate to include student accommodation. The trust noted that student accommodation is one of the most resilient real estate asset classes and has maintained high occupancy during the Covid-19 situation in the US. ART's first acquisition of a purpose-built student accommodation asset in the US was completed in February 2021 for US$95 million. The asset, Signature West Midtown, is a freehold property with 525 beds across 183 units located in the heart of Atlanta, Georgia.

ParkwayLife Reit (PLife Reit), the largest healthcare-focused S-Reit, has a diversified portfolio of 54 properties with a total asset value of approximately S$2.02 billion as at Dec 31, 2020. It owns a portfolio of private hospitals in Singapore comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. PLife Reit, which generated total returns of 21 per cent, was one of the best performing S-Reits in 2020 and continued to generate positive returns of 7.1 per cent in 2021 YTD.

PLife Reit's FY2020 net property income increased by 4.0 per cent year-on-year, which translated to a 4.5 per cent increment in its distribution per unit across the same period.

The Reit attributed its ability to deliver stable distributions to its strong capital structure.

During FY2020, PLife Reit successfully refinanced all its maturing debts due in 2021, with no debt refinancing requirement till 2022. It believes that the healthcare industry will continue to remain essential in the long run driven by a rapidly ageing population and a greater demand for better quality healthcare and global aged care services. SGX RESEARCH

• For more research and information on Singapore's Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

• Source: SGX Research S-Reits & Property Trusts Chartbook.