S-Reits under S$1b lead sector in Q1 2021

ELEVEN smaller cap Reits in the iEdge S-Reit Index with market capitalisation under S$1 billion have all generated positive returns in Q1 2021. The 11 Reits posted 14.0 per cent total returns in the year-to-date (YTD) through to April 8, outperforming the index's 2.4 per cent total returns.

The top five best performing smaller cap Reits of the index in the YTD through to April 8 are: ARA Logos Logistics Trust (25.6 per cent), Sabana Shari'ah Compliant Reit (23.9 per cent), ARA US Hospitality Trust (22.2 per cent), First Reit and Lippo Malls Indonesia Retail Trust (both 16.9 per cent).

These five were also among the six best performing Reits in the overall iEdge S-Reit index, with Starhill Global Reit (market cap of S$1.3 billion) coming in fourth at 16.9 per cent total returns.

In terms of price-to-book ratios, the 11 smaller cap Reits trade at an average 0.86 times, while the index trades closer to 1.05 times.

ARA Logos Logistics Trust (ALOG) has a portfolio of 27 logistics warehouses in Singapore and Australia valued at S$1.28 billion. In its recently published annual report, the Reit attributes its growth in 2020 to its new sponsor, Logos, which owns logistics spaces across the Asia-Pacific. ALOG's portfolio remained resilient and delivered a 3.4 per cent and 4.8 per cent growth in FY2020 gross revenue and net property income, respectively. The Reit also inked new leases and achieved positive rental reversion of 4.8 per cent in the financial year and has a gearing ratio of 39.0 per cent.

Sabana Reit's portfolio has 18 Singapore properties across high-tech industrial, warehouse and logistics, chemical warehouse and logistics, and general industrial sectors with a total value of S$0.9 billion. In its FY2020 results, the Reit reported 2.29 cents for its H2 2020 distribution per unit (DPU), a 47.7 per cent increase year-on-year, bringing its full year DPU to 2.76 cents. Amid a challenging 2020, the Reit achieved positive rental reversion of 0.9 per cent and maintains a gearing ratio of 33.5 per cent. On March 10, the Reit announced that its NTP+ Mall at New Tech Park has received temporary occupancy permit and is set to open in Q2 2021.

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ARA US Hospitality Trust (ARA H-Trust) is a stapled security with a portfolio of 41 upscale select-service hotels across 22 states in the United States operating under the Marriott and Hyatt brands. The trust notes in its latest annual report that despite having recorded a net property loss of US$5.0 million and nil distributable income in FY2020, all 41 hotels have since reopened in July 2020 and the trust has generated positive cash flows from operations for FY2020. ARA H-Trust remains confident in the long-term fundamentals of the US hospitality market. Its properties are oriented towards domestic transient leisure and business travellers and is less reliant on group and international demand.

SPH Reit, first to kick off the current reporting season for S-Reits, announced an improvement across its portfolio of retail malls. Gross revenue increased 4.9 per cent year-on-year and Q2 FY2021 DPU was issued at 1.24 cents, a 3.3 per cent increase quarter-on-quarter. SPH Reit noted that tenant sales at its Singapore malls have shown signs of recovery, following the phased lifting of safe distancing measures.

Frasers Logistics & Commercial Trust (FLCT) has announced that it will join the Straits Times Index (STI) on April 13. FLCT will replace Jardine Strategic on the STI following Jardine Matheson's announcement on March 8 to simplify the parent company structure and acquire Jardine Strategic. 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.