Solid fundamentals in S-Reits despite challenging 2022

THE year 2022 was a challenging one for the global Reits sector, with a rising interest rate environment and declining global growth.

During the year, the iEdge S-Reit Index declined 16 per cent in price returns, with dividends boosting its total returns to -12 per cent. Comparatively, the FTSE Epra Nareit Global Reits Index declined close to 25 per cent in price returns.

Despite headwinds over the past year, S-Reits reported solid and resilient fundamentals alongside the continued reopening of economies and the return of global travel. Hospitality Reits benefited significantly in 2022 with the rise in international tourist travels and was the sub-industry that saw the strongest performance for the year.

All hospitality trusts with Singapore assets recorded significant improvements in occupancy and RevPAR in H2 2022, benefiting from pent-up demand for overseas travels.

Retail Reits recorded marked recovery in shopper traffic footprint, stronger leasing activity and tenant sales with some even exceeding pre-Covid levels. In particular, consumer and leisure activities picked up in H2 2022 with the return of large-scale events and Mice activities. Office Reits also saw growth in occupancy rates and rental reversions while industrial Reits noted continued resiliency despite macro challenges.

Retail investors continued to be a key driver in S-Reits’ fund flow activities in 2022, accumulating net retail inflows of S$1.53 billion, while institutional investors saw net outflows of S$1.28 billion. S-Reits continued to be active in asset acquisitions throughout 2022, with total purchase considerations exceeding S$6 billion. Some of these acquisitions include maiden acquisitions and forays into new markets.

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Daiwa House Logistics Trust : DHLU 0% and Digital Core Reit : DCRU 0%, both listed in 2021, announced maiden acquisitions in Japan logistics facilities and European data centre facilities respectively, with both expected to be DPU accretive. ParkwayLife Reit : C2PU 0% and First Reit : AW9U 0% continued to expand their healthcare focus in Japan nursing homes through portfolio expansions and acquisitions.

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.