Institutional investors return to S-Reits in Q32021

THERE are seven S-Reits in the Straits Times Index (STI), making up close to 14 per cent of the benchmark.

The seven S-Reits generated an average total return of 5.2 per cent in the third quarter-to-date till Aug 5, outperforming the STI which gained 1.6 per cent over the same period.

Keppel DC Reit AJBU (+6.8 per cent), Ascendas Reit A17U (+6.8 per cent) and Mapletree Industrial Trust ME8U (+6.1 per cent) were the top three S-Reits performers in the STI.

The sector's outperformance was not limited to S-Reits within the STI, but also extended to the broader S-Reits and property trusts sector in Singapore. The iEdge S-Reit Index generated a total return of 3.6 per cent since the end of June, which is more than double that of the STI's 1.6 per cent gains.

In July 2021, institutional investors were net buyers of the sector with net inflows of S$54.1 million, after being net sellers for six consecutive months in 2021.

ARA Logos Logistics Trust K2LU (+S$46.7 million), Keppel Reit K71U (+S$25.8 million), OUE Commercial Reit TS0U (+S$19.1 million), Lendlease Global Commercial Reit JYEU (+S$17.2 million) and Starhill Global Reit P40U (+S$14.4 million) were the top five S-Reits that received the highest net institutional inflows in the first seven months of 2021.

Starhill Global Reit (SGReit) announced that its full year gross revenue grew 0.3 per cent year on year (yoy) to S$181.3 million in FY20/21. Its net property income (NPI) increased by 2.0 per cent yoy to S$134.7 million in FY20/21. The Reit's FY20/21 distribution per unit (DPU) grew 33.4 per cent yoy to 3.95 cents. SGReit noted that despite the uncertainty of the Covid-19 situation, its retail portfolio occupancy, based on committed leases, remained stable at 97.5 per cent as at June 30, 2021.

On Aug 4, Lendlease Global Commercial Reit (LReit) completed the acquisition of 53 per cent interest in Lendlease Jem Partners Fund and will make a further announcement on the status of the acquisition of a 5 per cent interest in Lendlease Asian Retail Investment Fund 3.

Upon completion of these acquisitions, LReit will hold an effective indirect interest of up to 31.8 per cent in Jem. LReit is scheduled to report its full year financial results on Aug 10, 2021.

OUE Commercial Reit (OUE C-Reit) reported a 3.1 per cent decline in NPI for 2021 due to the completion of divestment of a 50 per cent interest in OUE Bayfront in March 2021.

The performance of OUE Bayfront is no longer consolidated and is recognised as share of joint venture results.

With lower interest expense and including the share of joint venture results from OUE Bayfront, the amount available for distribution to OUE C-Reit's unitholders in H1 2021 was 3.0 per cent higher yoy, translating to a DPU of 1.23 cents, which is 23.0 per cent higher yoy. 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.