S-Reits in STI end Q1 with 10% gains, outperform Index

IN MARCH, the iEdge S-Reit Index declined 0.7 per cent in total returns, shaving its year-to-date (YTD) total returns to 4.3 per cent but still outperforming the Straits Times Index’s (STI) 0.8 per cent YTD total returns.

Key market drivers during the quarter, which also extended into March, continue to include global interest rate hikes, decelerating growth, persistent inflation, geopolitical tensions as well as global financial stability.

Globally, the FTSE EPRA Nareit Developed Index saw steeper declines of 4.3 per cent in total returns last month and ended the first quarter of the year flat.

All sub-segments within the Singapore-listed real estate investment trusts (S-Reits) and Property Trusts sector averaged negative total returns in March. Diversified, Industrial and Healthcare S-Reits saw the least declines, averaging -1.6 per cent, -3.4 per cent and -3.6 per cent total returns respectively.

The seven largest weighted constituents of the iEdge S-Reit Index, which are also constituents of the STI Index, averaged 2.7 per cent total returns last month. All seven S-Reits outperformed both the iEdge S-Reit Index and the broader STI Index. This added to their average YTD total returns of 9.4 per cent.

On the other hand, four out of the six S-Reits within the iEdge S-Reit Index that saw double-digit declines over the month have pure exposure to the US market.

Manulife US Reit, in a statement to address investor concerns, said that none of its lenders is a regional bank in the US and its lenders are mainly Singapore and multinational banks. The Reit also added that its unsecured sustainability-linked loan facility has been fully drawn to refinance its US$105 million Phipps mortgage loan, and that it will not have any refinancing requirements until 2024.

In terms of fund flows for March, retail investors were a key driver in the sector’s fund inflow activities, accumulating net retail inflows of S$142 million. On the other hand, institutional investors net sold S$245 million.

By sub-segments, in March, diversified S-Reits received the most net retail inflows of S$101 million and the most net institutional outflows of S$130 million, while data centre S-Reits saw the most net retail outflows of S$6 million and most net institutional inflows of S$2 million.

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On a quarterly basis, the sector saw S$283 million of net institutional outflows and S$185 million of net retail inflows. Two S-Reits received net inflows from both retail and institutional investors. ParkwayLife Reit received net inflows of S$0.6 million and S$1.5 million from retail and institutional investors respectively. OUE Commercial Reit received net inflows of S$0.9 million and S$0.08 million from retail and institutional investors respectively. 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.