The Straits Times Index (STI) gained 0.6 per cent in total returns for the year to date till Jun 8, slightly underperforming the iEdge S-Reit Index which gained 0.8 per cent.

Following the June 2023 quarterly review, FTSE Russell announced that there would be one change to the constituents of the STI. Seatrium : S51 0% has been added to the STI and Keppel DC Reit : AJBU 0% has been removed from the index.

Effective at the start of business on Jun 19, the STI will have six S-Reits while the STI reserve list will have (in alphabetical order) four S-Reits – CapitaLand Ascott Trust : HMN 0%, Frasers Centrepoint Trust : J69U 0%, Keppel DC Reit and Suntec Reit : T82U 0% – as well as Olam Group : VC2 0%.

The STI reserve list is used in the event that one or more of the STI constituents are deleted in between quarterly reviews.

In total, the 10 S-Reits that are part of the STI and its reserve list, averaged 4.2 per cent total returns in the year to date till Jun 8, outpacing the STI and the iEdge S-Reit Index. Seven out of the 10 S-Reits outperformed the two indices – Keppel DC Reit (18.2 per cent), Frasers Logistics & Commercial Trust : BUOU 0% (9 per cent), Frasers Centrepoint Trust (7.2 per cent), Mapletree Logistics Trust : M44U 0% (6 per cent), CapitaLand Ascott Trust (3 per cent), Mapletree Industrial Trust : ME8U 0% (2.6 per cent) and Mapletree Pan Asia Commercial Trust : N2IU 0% (0.8 per cent).

Keppel DC Reit is the best-performing Reit in the year so far, with 18.2 per cent total returns. While it reported last week that one of its customers – Cyxtera Technologies, a US-listed data centre operator – has filed for bankruptcy protection amid struggles to pay down debt and a severe funding crunch, the Reit said that the asset accounts for less than 2 per cent of its assets under management (AUM) and has no material impact on its distribution per unit.

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Last week, Singapore also launched new standards for data centres to optimise energy efficiency in tropical climates, allowing data centres to gradually increase operating temperatures to 26 degrees Celsius and above. The Infocomm Media Development Authority said that with every 1 deg C increase in operating temperature, data centres could save about 2 per cent to 5 per cent in cooling energy.

Keppel DC Reit has six data centres in Singapore, amounting to 54.7 per cent of overall AUM as at Mar 31, 2023. In its 2023 first-quarter business update, Keppel DC Reit noted that its distributable income was partially offset by lower net contributions from some of the Singapore colocation assets arising from higher facilities expenses including electricity costs.

Aside from Keppel DC Reit, STI constituents – Mapletree Industrial Trust and CapitaLand Ascendas Reit : A17U 0% also have exposure to Singapore data centres. As at Mar 31, 2023, Mapletree Industrial Trust’s Singapore data centres accounted for 3.4 per cent of its AUM, while CapitaLand Ascendas Reit has three data centres in Singapore.

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 Research S-Reits & Property Trusts Chartbook.