S-Reits make maiden forays into new segments

S-REITs have announced asset acquisitions exceeding S$9 billion in total purchase consideration over the past 10 months of 2021.

In the month of October, most acquisitions were in logistics and grocery-anchored retail assets and include several maiden acquisitions or forays into new market segments.

Acquisitions in October totalled S$765 million in purchase consideration and were made by CapitaLand China Trust AU8U , Ascendas Reit A17U , Mapletree Logistics Trust M44U , and United Hampshire US Reit ODBU : ODBU 0% .

CapitaLand China Trust (CLCT) made its first foray into China's logistics sector with the acquisition of 4 logistics properties in Shanghai, Kunshan, Wuhan and Chengdu worth 1.7 billion yuan (S$350.7 million).

This increases CLCT's exposure to new economy asset classes following its maiden purchase of a portfolio of 5 business park properties as part of its portfolio reconstitution strategy announced in 2020 to cover multi-assets used primarily for retail, office and industrial use.

The 4 properties have a committed portfolio occupancy of 96.3 per cent and a weighted average lease to expiry of 2.1 years as at Aug 31, 2021. Post-acquisition, CLCT's proportion of new economy assets by asset value will increase from 15.3 per cent to 21.4 per cent.

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CLCT has a 5-year acquisition growth roadmap and plans to achieve a balanced portfolio mix by 2026 comprising 40 per cent in commercial developments, 30 per cent in retail properties and 30 per cent in new economy assets such as business parks, logistics and data centres.

Ascendas Reit in October acquired 11 last mile logistics properties in Kansas City, in the United States for S$207.8 million, marking its first venture into the US logistics market.

Ascendas Reit notes that the Kansas City's logistics sector is well-supported by its central location within the US and its myriad businesses and sectors including transportation and distribution, e-commerce, manufacturing, animal health, technology and the financial industry.

The properties are 92.6 per cent occupied by 27 customers from diverse industries including third-party logistics, wholesale distribution, manufacturing and healthcare and no single customer makes up over 10 per cent of the portfolio's total rental income, lowering portfolio concentration risk.

Mapletree Logistics Trust (MLT) announced the proposed acquisition of the Yeoju Logistics Centre in South Korea for 135 billion won (S$153.8 million), expanding MLT's presence in the Seoul Metropolitan Area to a total of 19 assets.

The property is fully leased to one of South Korea's largest online fashion platforms and a domestic third-party logistics service provider.

It is located in northern Yeoju, which is a newly established logistics hub situated near two major expressways providing enhanced accessibility to and from Seoul.

The acquisition raises MLT's e-commerce revenue exposure in South Korea to 31 per cent, from its previous 24 per cent.

United Hampshire US Reit (UHReit) made its maiden acquisition since listing, acquiring two dominant grocery-anchored retail assets for US$78.25 million (approximately S$105.7 million) in Pennsylvania and Virginia, and extending UHReit's focus on the Eastern seaboard.

The Pennsylvania property is 94.1 per cent occupied while the Virginia property has a 99.1 per cent occupancy rate.

Both properties are anchored by tenants including Publix, one of the largest US grocery chains, and ShopRite, which is a leading supermarket brand in the region, among other home improvement and variety stores.

UHReit notes that both assets fit well with their investment criteria given the locations with limited competition, densely populated communities and backed by cycle agnostic tenants providing essential services. 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.