S-Reits rebound from early April sell-off
They may offer investors some shelter, given their weak correlation with US and global equities
[SINGAPORE] Real estate investment trusts in Singapore (S-Reits) have rebounded strongly over the past two weeks, in line with the broader recovery in the Singapore market following the sell-off in early April.
As at Thursday’s (Apr 24) close, the iEdge S-Reit index has climbed 5.9 per cent since Apr 11, with all 30 constituents ending flat or higher. S-Reits with international exposure, as well as those holding hospitality assets, ranked among the top performers.
Over the past two weeks, the top 10 performers in the iEdge S-Reit index mostly saw net institutional inflows, with these counters receiving a combined S$23.3 million in net institutional inflows from Apr 14 to 24.
However, institutional and retail investors were net sellers of the broader S-Reits sector over the same period. From Apr 14 to 24, institutional investors net sold S$36.6 million in S-Reits, bringing their total net outflows for the sector to S$465.1 million for the year-to-date.
Meanwhile, retail investors net sold S$64.4 million over the same period, reversing net buying activity earlier this month. For the year-to-date, retail investors remain net buyers of the S-Reits sector, with total net inflows of S$261.9 million.
CapitaLand China Trust (CLCT) ranked among the top three iEdge S-Reit index constituents over the past two weeks, with its units rising over 11 per cent from Apr 14 to 24.
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CLCT’s first-quarter business update on Apr 24 showed that it maintained high occupancy for its retail portfolio of 97.7 per cent, with positive rental reversions of 0.5 per cent.
The Reit’s business parks also had stable occupancy of 83.7 per cent, while logistics parks saw 95.7 per cent occupancy.
The CEO of CLCT’s manager noted in a recent SGX kopi-C interview that CLCT’s malls mainly serve China’s middle-income consumers, and the tenants have little dependence on US-imported products. He added that although US tariffs have introduced volatility to capital markets, the direct impact on CLCT’s operations remains minimal.
Elsewhere, Mapletree Logistics Trust’s (MLT) full-year results, released on Apr 23, showed stable operating performance with 96.2 per cent occupancy as at end-March, and positive rental reversion of 5.1 per cent for Q4.
The Reit recorded positive rental reversions in all markets except China. MLT’s manager noted that the diversified portfolio mitigated headwinds from higher borrowing costs and China weakness.
MLT’s manager added that the changing trade policy landscape is unprecedented and evolving, and tenants are expected to take a cautious approach to leasing and expansion in the short term. However, the majority of MLT’s tenants are serving local domestic consumption, accounting for around 85 per cent of portfolio revenue as at its Q4.
MLT’s units rebounded 7.4 per cent from Apr 14 to 24, ranking it among the top 10 index performers.
Similarly, Suntec Reit units also gained 7.4 per cent over the same period.
The Reit, which also announced its Q1 business update on Apr 24, reported improved distributable income (DI) for the period ended March, rising 4.3 per cent on year to S$45.9 million. Distribution per unit was also 3.4 per cent higher year on year for Q1.
The manager noted that DI was improved due to lower financing costs as well as better operating performance, with all properties – except for 55 Currie Street, Adelaide – registering stronger operating performance.
Some 13 S-Reits have already released their financial results or business updates for the financial period ended March. Another 12 S-Reits are expected to release their latest filings this week, including STI constituents CapitaLand Ascendas Reit , Mapletree Industrial Trus t, and Frasers Centrepoint Trus t.
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 S-Reits & Property Trusts Chartbook.
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