Clearly, S-REITs with Singapore assets are more popular with investors than -those with US assets. REITs with local assets have higher liquidity, based on their average daily traded volume, and they trade at more compressed yields than those with US assets (see table). In addition, some S-REITs with predominantly local assets, such as CapitaLand Mall Trust, CapitaLand Commercial Trust, Frasers Centrepoint Trust, Mapletree Commercial Trust and Mapletree Industrial Trust, have a large following of institutional investors.
SINGAPORE (Sept 2): In our article “Attracted by fees, foreign sponsors continue to list, boosting SGX’s position as global REIT hub” (Issue 891, July 22), we wrote that there had been three large real estate investment trust (REIT) IPOs with US assets since the beginning of the year, and that future large IPOs are most likely to be S-REITs with US assets.
S-REITs with US assets differ from -those with local assets in many aspects. Generally, they include the length of the leases, reflected by their weighted average lease expiry (WALE); management fees, comprising base and performance fees; and rental reversions, which is the change in rents upon the expiry of the lease. But, more importantly, the assets in these REITs have exposure to a different geographic location, which may explain the lack of interest and unfamiliarity among local investors.
