The Business Times
REIT WATCH

Logistics S-Reits to ride on e-commerce growth

CANDACE LI
Published Sun, Sep 18, 2022 · 02:00 PM

WITH accelerated digital transformation, shifts in consumer trends and a greater focus on supply-chain resilience, the global logistics industry remains central to the rapid growth of e-commerce. According to Cushman & Wakefield, global industrial/logistics Reits recorded the highest 10-year annualised total returns of any asset class, at 16.4 per cent last year, buoyed by the unprecedented growth in e-commerce.

Reits with logistics properties are typically labelled as industrial Reits. There are 11 listed S-Reits and Property Trusts with exposure to logistics properties. These trusts have assets located globally in major cities including Singapore, China, Japan, India, Australia, the UK and the US.

The 11 trusts, which underperformed the broader iEdge S-Reit Index in the year-to-date, saw stronger rebounds in the 3Q-to-date. They averaged 3Q-to-date total returns of 4 per cent, compared to the iEdge S-Reit Index’s 1 per cent total returns. On a longer term basis, the 11 trusts generated average 10-year total returns of 90 per cent, outpacing the iEdge S-Reit Index’s 69 per cent total returns.

Ascendas Reit : A17U 0% (AReit) has a portfolio value of S$16.6 billion, consisting of 25 per cent in logistics assets. Last week, the Reit proposed to acquire a cold storage logistics facility in Singapore for S$191.9 million. It will be the Reit’s first cold storage facility investment in Singapore. As at Jun 30, 2022, the property is fully occupied by five well-established tenants including a supermarket chain and leading distributors of fruits and vegetables. With a weighted average lease expiry of 7 years and built-in rent escalations of 2 per cent to 3 per cent every 3 years, the Reit expects the acquisition to expand its customer base and strengthen its income stability.

This comes after AReit completed the acquisition of 7 logistics properties in Chicago in the US, for a total purchase consideration of S$133.2 million in 2Q2022. With plans to diversify its exposure in the US, AReit acquired a total of 18 last-mile logistics properties in the last 12 months across Kansas City and Chicago. Its US logistics portfolio was worth S$2.5 billion as at Jun 30, 2022, and comprises business spaces and logistics properties.

Mapletree Logistics Trust : M44U 0% (MLT) is focused on logistics assets in the Asia-Pacific. As of Jun 30, 2022, it has a portfolio of 185 properties in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Vietnam with assets under management of S$13 billion.

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MLT expects that the acceleration of e-commerce will continue to drive demand growth for logistics space, particularly modern logistics properties in prime locations. It notes that Covid-19 has further underscored the importance of building supply chain diversification and resiliency. Hence, it believes that with MLT’s extensive network of strategically located assets across Asia-Pacific, it is well-positioned to meet the growing needs of global and regional supply chain players. 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 SREITs & Property Trusts Chartbook.

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

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