LOCALLY-LISTED real estate investment trusts (S-Reits) extended their rally in December, with the i-Edge S-Reit Index logging its best-ever month on record.

The benchmark index, which measures the performance of Reits in Singapore, gained 9 per cent in December, the best monthly performance since the index’s inception in September 2010.

The performance beat the previous record of 8.6 per cent in April 2020, and extended the 6.7 per cent gains already recorded in November this year.

Investors have grown more optimistic on the Reit sector in recent months, following a sluggish performance earlier in 2023.

Following signs that inflation is under control, the US Federal Reserve pivoted to a more dovish stance in its December meeting – signalling that it will cut rates next year.

The iEdge S-Reit Index had hit three-year lows in October 2023, but the two-month winning streak in the year-end has resulted in the index ending the year 0.3 per cent higher.

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The counters leading the sector rally in December were those that were among the worst performers earlier this year.

These included the US office Reits, such as Prime US Reit, Keppel Pacific Oak US Reit and Manulife US Reit. Unit prices for these counters have surged between 47 and 95 per cent in December, with retail investors net buyers of the three US office Reits for the month.

Institutional investors were also net buyers of Prime US Reit, but they were net sellers of Manulife Reit and Keppel Pacific Oak, with net outflows of S$3.1 million and S$3.9 million, respectively.

Apart from the US office Reits, 11 other trusts also posted double-digit gains over the past month.

These included counters such as CapitaLand Integrated Commercial Trust (CICT), Mapletree Pan Asia Commercial Trust (MPACT), Mapletree Industrial Trust (MINT) and OUE Commercial Trust.

CICT, MPACT and MINT were the top three counters in terms of net institutional inflows for the month of December, with the trio recording some S$79.6 million in inflows in total.

In terms of the sector’s net fund flows for December, retail investors net sold S$100 million, while institutional investors had S$16.8 million in net inflows.

Capitaland Ascendas Reit was the counter with the highest net outflows. The counter saw S$31.2 million and S$37.8 million of net outflows from institutional and retail investors, respectively.

For 2023, Digital Core Reit was the best performing S-Reit, delivering total returns of 25.6 per cent, assuming dividends were reinvested. The counter saw net institutional outflows of S$8.7 million and S$4.7 million of net retail inflows during the year.

Around half the S-Reits delivered positive total returns in 2023.

Other top-performing counters included Mapletree Industrial Trust, United Hampshire US Reit, Frasers Hospitality Trust and Capitaland Ascendas Reit, which delivered total returns of between 16.9 and 22.7 per cent for the year.

The overall sector saw nearly S$1 billion in net institutional outflows for the full year, with Suntec Reit the counter facing the highest outflows from institutions.

The counter also had the highest net retail inflows in 2023, however, amounting to some S$168.7 million. Suntec Reit delivered total returns of negative 5.7 per cent in 2023.

For the full year, retail investors were net buyers of Reits, with total net inflows of S$810.1 million.

Analysts are expecting a more resilient performance from S-Reits next year, amid expectations of interest rate cuts.