Singapore-based office S-Reits see growth in occupancy and rent reversions

ACCORDING to JLL, Singapore office rents in Q3 2022 have reached a near 14-year high, exceeding the pre-pandemic peak. CBD Grade A office rents have taken just 18 months to recover the grounds lost due to Covid-19.

S-Reits with Singapore based office assets reported growth in rental reversions and improvements in occupancy rates.

CapitaLand Integrated Commercial Trust : C38U 0% (CICT) reported higher Q3 2022 gross revenue and net property income (NPI) of 29.6 per cent and 27.7 per cent year on year (yoy) respectively for its office portfolio.

Its Singapore offices recorded a 7.9 per cent growth in rent reversion in 9M 2022 while portfolio occupancy increased from 92.9 per cent in Q2 2022 to the current 96 per cent.

CICT guided that the gap between actual and committed occupancies in four of its properties (Asia Square Tower 2, Six Battery Road, CapitaSpring, and Capital Tower) is expected to narrow by Q2 2023 and lift distributable income.

Mapletree Pan Asia Commercial Trust’s : N2IU 0% (MPACT) Mapletree Business City recorded yoy growth in both gross revenue and NPI in H1FY23.

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Committed occupancy has also improved marginally to 98.4 per cent.

Together with Vivocity, both assets contribute approximately 63 per cent of the Reit’s gross revenue and NPI, underscoring their status as crown jewels of MPACT.

Suntec Reit’s : T82U 0% Singapore office portfolio continued to strengthen as NPI and joint venture income increased by 3.8 per cent and 7.2 per cent yoy respectively in Q3 2022, driven by higher occupancy and rent at Suntec City Office, One Raffles Quay and MBFC Properties.

Committed occupancy remained strong at 99.4 per cent, above the core CBD occupancy of 94.8 per cent.

The Reit also recorded 17 quarters of positive rent reversion in its Singapore offices and an increase of 5.7 per cent in 9M 2022.

Suntec Reit expects revenue contribution from this segment to strengthen further, underpinned by the tight office supply.

Keppel Reit’s : K71U 0% 9M 2022 distributable income rose 3.4 per cent yoy, driven by the acquisition of Keppel Bay Tower.

Committed occupancy increased to 96.8 per cent and average signing rent for Singapore office leases continued to rise to S$11.47 per square foot per month (psf pm).

To celebrate its 20th anniversary in 2026, Keppel Reit will distribute S$100 million over the next five years as an anniversary distribution to unitholders.

OUE Commercial Reit : TS0U 0% reported that it achieved positive rental reversions and increased committed occupancy for all Singapore office properties in Q3 2022. Rental reversions ranged from 1.6 per cent to 9.2 per cent.

The Reit expects core CBD Grade A office rental growth to remain positive for the rest of 2022 and 2023 due to limited supply, barring a sustained recession.

Lendlease Global Commercial Reit reported that office rental escalation increased approximately 4 per cent in Q1 FY23, and its Jem mall continued to be well-placed to tap the upcoming transformation of Jurong Gateway.

Its Grade A office building is leased to the Ministry of National Development till 2044 with a rental review every five years. 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 Research S-Reits & Property Trusts Chartbook.