S-Reits see resilience in diversification

AS Singapore Reits and property trusts continue to diversify in terms of asset mix, diversified S-Reits now make up the largest sub-segment of the sector. More diversification can improve a Reit’s resilience to external shocks and allow it to capture growth trends across a multitude of segments.

Today, there are nine diversified S-Reits, making up almost a quarter of the total number of S-Reits. This is compared to the start of 2020, where diversified S-Reits only accounted for 14 per cent of the sector.

Eight out of the nine diversified S-Reits have reported their latest financial results. Among them, five announced full year results – CapitaLand China Trust : AU8U 0%, CapitaLand India Trust : CY6U 0%, CapitaLand Integrated Commercial Trust : C38U 0%, OUE Commercial Reit : TS0U 0% and Suntec Reit : T82U 0%.

CapitaLand China Trust (CLCT) announced a net property income (NPI) of S$254.2 million for FY2022, 1.5 per cent higher than FY2021. This was mainly contributed by the acquisitions made across business and logistics parks in 2021. It expanded its investment mandate in September 2020 to cover multi-assets including retail, office and industrial segments. CLCT noted that its strategic pivot to create a diversified portfolio has helped to weather the impact of Covid-19 in FY2022, with contributions from its new economy assets mitigating the softness in its retail portfolio.

CapitaLand India Trust (CLINT) reported a 7 per cent year-on-year increase in NPI, resulting in a 5 per cent increase in distribution per unit (DPU) to 8.19 Singapore cents. This was mainly attributed to higher portfolio occupancy and income from new acquisitions, including its first industrial facility acquired in 2022. Aside from industrial assets, CLINT also made its first entry into the data centre sector in India back in 2021.

CapitaLand Integrated Commercial Trust (CICT), which also attributed its growth to contributions from newly acquired assets, reported a year-on-year increase of 10.5 per cent in gross revenue, which led to a 9.7 per cent growth in NPI over the same period.

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OUE Commercial Reit (OUE C-Reit) reported overall NPI of S$196.9 million, down 3.6 per cent year-on-year. NPI for the commercial segment, which consists of retail and office assets, declined 5.3 per cent to S$133.5 million but was slightly offset by the hospitality segment which was up 0.2 per cent to S$63.4 million. Looking ahead, OUE C-Reit expects stable performance in its core Grade A office portfolio despite lower rental growth forecast due to expectations of weaker global economic growth. It is also optimistic about the recovery of the retail and hospitality segments with the reopening of China borders and pickup in tourism activities.

Suntec Reit reported NPI of S$315.8 million for FY2022, 24 per cent higher year-on-year. This was mainly due to higher contributions from Suntec City in Singapore and The Minster Building in London. As a result, DPU grew 2.5 per cent to 8.88 Singapore cents. The Reit expects the return of tourists and meetings, incentives, conventions and exhibitions (Mice) events to have positive contributions to its retail and convention businesses. 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 S-Reits & Property Trusts Chartbook. Source: SGX S-Reits & Property Trusts Chartbook