Recovery continues for S-Reits with Singapore retail assets

SINGAPORE’S retail sales continued to rise in October 2022, though at a slower pace compared to the previous month. October’s retail sales increased 10.4 per cent year on year (yoy), extending September’s 11.3 per cent growth and marking its seventh consecutive month of double-digit yoy growth.

The estimated total retail sales value in October was S$4.0 billion, of which online retail sales made up an estimated 13.0 per cent, compared to the 13.9 per cent recorded in September. Analysts expect the growth momentum to continue into the last two months of 2022 as consumers enter the festive season and households front-load big-ticket item purchases ahead of the goods and services tax hike starting in 2023.

Listed on the Singapore Exchange are seven S-Reits which have significant exposure to Singapore-based retail assets: CapitaLand Integrated Commercial Trust : C38U 0%, Frasers Centrepoint Trust : J69U 0%, Lendlease Global Commercial Reit : JYEU 0%, Mapletree Pan Asia Commercial Trust : N2IU 0%, SPH Reit : SK6U 0%, Starhill Global Reit : P40U 0% and Suntec Reit : T82U 0%.

The S-Reits, in their most recent business updates and financial results, continued to post strong operational recoveries in terms of shopper traffic and tenant sales. In terms of price performance, the top three performers for the quarter-to-date till Dec 15 were CapitaLand Integrated Commercial Trust (+6.3 per cent), SPH Reit (+1.1 per cent) and Frasers Centrepoint Trust (+1.1 per cent).

CapitaLand Integrated Commercial Trust reported 21.3 per cent y-o-y growth in tenant sales and 21.9 per cent y-o-y growth in shopper traffic for 9M 2022. The leisure & entertainment trade category, which saw 124.4 per cent y-o-y growth, saw the strongest recovery in terms of tenant sales followed by shoes & bags at 70.3 per cent y-o-y growth.

The Reit noted that leasing activity started to pick up in Q3 2022 with demand primarily driven by food & beverage operators. For the full year FY 2022, SPH Reit’s portfolio gross revenue grew by 1.7 per cent yoy to S$281.9 million, while net property income (NPI) recovered by 3.5 per cent yoy to S$209.7 million. Its Singapore portfolio’s retail tenant sales grew 8.8 per cent yoy while footfall increased 15.9 per cent yoy. SPH Reit also announced that it will change its financial year end from Aug 31 to Dec 31.

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Frasers Centrepoint Trust, which also reported full year FY2022 financial results in October, noted a 4.6 per cent y-o-y increase in gross revenue for the year and a 4.9 per cent y-o-y increase in NPI. This was lifted by stronger H2 2022 results due to an absence of rental rebates to tenants and an increase in atrium income with the resumption of atrium events from March 2022.

Its portfolio shopper traffic recovered 12.4 per cent yoy while tenant sales was up 11.3 per cent yoy and averaged 10 per cent above pre-Covid levels. SGX RESEARCH

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 monthly S-Reits & Property Trusts Chartbook.

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