Nearly 2 in 3 S-Reits are faring worse than at IPO, but total returns mostly positive

INVESTORS in Singapore-listed real estate investment trusts (S-Reits) may be understandably upset as they look at their portfolio performance.

Real estate investment trusts (Reits) have been a favoured asset class for investors here seeking stability and yield. But ahead of the 20th anniversary of S-Reits coming up in July, nearly two-thirds of the 41 actively traded S-Reits and property trusts have sunk below their initial public offering (IPO) prices after adjusting for corporate actions.

Notably, all but 4 of the 22 S-Reits that listed on the Singapore Exchange (SGX) over the past decade since 2012 are below where they started, according to data compiled by The Business Times..

Keppel DC Reit has been the outperformer among the newer listings, more than doubling from its IPO price of S$0.93 in December 2014.

With dividends reinvested, the data centre landlord has managed a total return of 194.5 per cent. This translates to an annualised total return of 15.5 per cent – the second-highest among the S-Reits.

Another S-Reit listing within the past 10 years that has been a standout performer is Frasers Logistics & Commercial Trust (FLCT), which made its trading debut as Frasers Logistics & Industrial Trust (FLT) in June 2016 before merging with Frasers Commercial Trust (FCOT) in 2020.

After adjusting for corporate action, FLCT is trading 47.3 per cent above its IPO price of S$0.89, with a total return of 110.8 per cent and an annualised total return of 13.3 per cent.

The only other 2 more recent S-Reit listings that are trading above their IPO prices are Mapletree North Asia Commercial Trust (MNACT) and SPH Reit.

However, investors can take comfort from the fact that only 8 of the 41 actively traded S-Reits have failed to deliver positive total returns since listing.

These include 5 S-Reits – ARA US Hospitality Trust, Prime US Reit, United Hampshire US Reit, Daiwa House Logistics Trust and Digital Core Reit – that listed within the past 3 years since 2019.

These S-Reits may require more time to stabilise, as they have had to grapple with the Covid-19 pandemic and a confluence of macroeconomic headwinds since listing.

The other 3 S-Reits that have generated negative total returns since their listings are Lippo Malls Indonesia Retail Trust, BHG Retail Reit and Dasin Retail Trust.

Interestingly, all 8 of these underperforming S-Reits are focused on overseas assets outside of Singapore.

Further, the data seems to suggest that, when it comes to S-Reits, old is gold.

The first 2 Reits to be listed in Singapore in 2002, CapitaLand Mall Trust (CMT) and Ascendas Reit, rank among the top performers in the market.

CMT, which was renamed CapitaLand Integrated Commercial Trust (CICT) following the 2020 merger with CapitaLand Commercial Trust (CCT), owns and invests in retail and office assets located predominantly in Singapore.

The largest proxy for Singapore commercial real estate, some 93 per cent of CICT’s S$22.9 billion property portfolio is based in Singapore, with the remaining 7 per cent in Germany and Australia.

From its IPO price of S$0.98 in July 2020, CICT has seen its unit price jump 173.1 per cent, after adjusting for corporate action. With dividends reinvested, this translates to a total return of 643.3 per cent since its listing, or an annualised total return of 10.6 per cent.

Ascendas Reit, which is also under the CapitaLand umbrella, has a portfolio that includes business spaces, logistics and distribution centres, industrial properties and data centres.

As at end March, the Reit’s investment properties under management stood at S$16.4 billion, with 61 per cent located in Singapore and the remainder in the US, Australia, the UK and Europe.

Ascendas Reit is trading at more than triple its IPO price, with a total return of 958.6 per cent since its inception – the highest in the S-Reit universe.

Certainly, their sheer size could have played a part in their success. CICT and Ascendas Reit are the 2 largest S-Reits, with market capitalisations of S$14.1 billion and S$11.6 billion, respectively, as of June 16.

Another case in point is Mapletree Logistics Trust (MLT), which also ranks among the biggest S-Reits with a market cap of S$7.8 billion.

Listed in July 2005 at an IPO price of S$0.68, MLT is now trading nearly 2-and-a-half times higher. It has managed a total return of 620.5 per cent since its listing, or an annualised total return of 12.4 per cent.

But other smaller “old-timers” have performed remarkably as well.

For example, Suntec Reit, which made its trading debut in December 2004, has seen its unit price grow 67 per cent, with a total return of 401.5 per cent or an annualised total return of 9.6 per cent.

Other standout performers in the S-Reit market include Frasers Centrepoint Trust (FCT), Parkway Life Reit, Mapletree Industrial Trust (MIT) and Mapletree Commercial Trust (MCT), which have generated annualised total returns of between 11 per cent to 15.6 per cent.