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REIT WATCH

Green shoots into 2021

S-REITs started 2021 in the green with the iEdge S-Reit Index gaining 2.0 per cent in price change over the first five trading sessions of the year, after exiting 2020 with total returns of -2.2 per cent. In 2020, S-Reits outperformed the Straits Times Index's -8.1 per cent total returns and major global Reit markets which recorded an average of -7.5 per cent total returns.

Five of the index's biggest gainers across the first five trading sessions of 2021 were ARA US Hospitality Trust (20.6 per cent), First Reit (8.5 per cent), ARA Logos Logistics Trust (8.3 per cent), Ascendas India Trust (7.2 per cent) and CapitaLand Integrated Commercial Trust (5.1 per cent). Together, the five averaged 10.0 per cent in gains for the first five trading days of the year.

Notable movers of the week

ARA US Hospitality Trust (ARA HTrust) has in the week seen an initiation coverage by DBS Group Research with a "buy" rating and target price of US$0.69, implying an upside of over 50 per cent with the progressive rollout of Covid-19 vaccines in the US.

The research report also noted that the trust is positioned mainly in the upscale select-service hotels subsector which has proven to have more efficient operational metrics, and has the ability to maintain profitability at lower room rates against peers that are likely to remain in the red.

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ARA HTrust is a stapled security comprising both a Reit and a property business trust with a portfolio of 41 hotels in the US. Its portfolio consists of 38 Hyatt-branded hotels and three Marriott-branded hotels.

First Reit had on Jan 5 announced a proposed restructuring of the master lease agreements for all of the hospitals it had leased to Lippo Karawaci and certain subsidiaries of Siloam International Hospitals, and a S$158.2 million rights issue to be used for repayment of loan facilities, costs of the restructuring, and working capital.

First Reit has a portfolio of 20 properties comprising healthcare and healthcare-related real estate assets in Asia, with 16 located in Indonesia, three in Singapore and one in South Korea.

ARA Logos Logistics Trust (ALOG) announced a preferential offering raising gross proceeds of approximately S$50 million which will be used to partially finance its proposed acquisition of five Australian logistics properties and investments into two funds, a 49.5 per cent interest in the New LAIVS Trust and a 40.0 per cent interest in the Oxford Property Fund.

UOB KayHian re-initiated coverage on ALOG with a "buy" rating and target price of S$0.85, implying an upside of 41.7 per cent.

The research report highlighted ALOG's potential to tap its new sponsor's (Logos) expertise in logistics properties and its sizeable acquisition pipeline of US$10.2 billion.

ALOG is a Reit invested in 27 logistics warehouse properties located in Singapore and Australia. 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, data as at Jan 8, 2021.

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