Singapore REITs command a significant presence in the Singapore stock market. Representing more than 10% of the total market value of Singapore-listed stocks, and more than 20% of the day-to-day turnover, these are considerably higher levels than what REITs maintain on a global scale. Colloquially known as S-REITs, in Singapore, the sector maintains a combined market value of more than $100 billion. This represents a CAGR of more than 25% since the debut of CapitaMall Trust on July 17, 2002.
Much of the market value growth has come down to an average of two new listings every year, proactive capital management and a vibrant appetite for the now-common asset class by investors. That proactive capital management has seen a clear drive to increase unitholder value, by enhancing, recycling, divesting or acquiring properties. Investor enthusiasm has also figured into many of these acquisitions through secondary fundraisings such as placements and rights issues, in addition to the traditional means of debt.
Last year, half of the S-REITs listed on the Singapore Exchange announced asset acquisitions, valued at more than $15 billion and exceeding $12 billion in total purchase price consideration. The momentum has continued somewhat in 2022, with a dozen REITs announcing acquisitions with close to $5 billion in total purchase price consideration. The acquisitions (see table) are also a testament to the diversified type of properties that make up the sector, in addition to the significant global reach.
MLT’s acquisition drive
Mapletree Logistics Trust (MLT) was the most active of the contingent in asset acquisitions last year, with stapled trust Ascott Residence Trust and business trust Ascendas India Trust the next most active. Paralleling the significant regional reach of Singapore-listed stocks, last year, MLT’s acquisitions in the logistics sector spanned South Korea, India, Singapore, Australia, Malaysia, China, Vietnam and Japan. MLT has continued its acquisition drive in 2022. This included the announcement of an acquisition of two parcels of leasehold industrial properties in Malaysia, and the Baeska Logistics Centre in South Korea in February. With a purchase price of $21.0 million, the acquisition of the two parcels of leasehold industrial properties located in Subang Jaya, Selangor, was completed in July. The acquisition of the Baeska Logistics Centre, a four-storey single block dry logistics facility that came with a purchase price of $100.3 million, was completed in April.
As at June 30, 2022, MLT maintained a portfolio of 185 properties in Singapore, Australia, China, Hong Kong, India, Japan, Malaysia, South Korea and Vietnam with assets under management of $13.0 billion. MLT was the first Asia-focused logistics REIT to list in Singapore back in July 2005, with 15 properties and a Singapore-based portfolio value of $422 million.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
Strong occupancy for LREIT
Among the largest acquisitions of the year are those announced by Lendlease Global Commercial REIT (LREIT) and CapitaLand Integrated Commercial Trust (CICT).
In February this year, LREIT announced it was acquiring the remaining 68.2% interest in Jem mall, with the agreed value of the property at $2.079 billion. The acquisition was completed in April, with the manager raising $1.7 billion in proceeds to fund the acquisition. This included an equity fundraising with close to $650 million in aggregate proceeds, in addition to the issue and listing of consideration units.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
With the completion of the acquisition, LREIT’s portfolio WALE increased to 8.7 years, and its exposure to the suburban retail sector expanded significantly to 47%. For its FY2022 ended June 30, LREIT’s retail portfolio continued to maintain a strong occupancy rate of 99.6%. As of June 30, 2022, LREIT registered a positive rental reversion of 3.6%. LREIT also reported its distributable income rose 55.6% y-o-y to $42.9 million in 2HFY2022, and notwithstanding the enlarged unit base, its DPU increased 4.9% y-o-y in 2HFY2022. With the acquisition of the remaining 68.2% interest in Jem mall yield-accretive, LREIT maintains a DPU yield of 6.1%, based on a unit price of 79.5 cents per unit.
CICT is Singapore’s largest REIT by market value
In March, CICT announced it was acquiring a 70% interest in a Grade-A office building at 79 Robinson Road, Singapore. CICT funded its share of the acquisition with a combination of divestment proceeds from the sale of JCube and debt. The acquisition was completed in April, with Southernwood Property obtaining approval for the change of the name of the property, which is located at the junction of Robinson Road and Maxwell Road within the Tanjong Pagar district, to CapitaSky.
CICT remains Singapore’s largest REIT by market value, and among the largest in Asia Pacific, with a portfolio value in excess of $20 billion. The S-REIT journey began with this REIT, in the form of CapitaMall Trust, which debuted with a portfolio value of $900 million. During this journey, CapitaMall Trust merged with CapitaLand Commercial Trust in November 2020, creating a larger investment vehicle to better capitalise on the trend of mixed-use developments integrating office and retail components.
Along with acquisitions, mergers within the sector have also been a by-product of proactive capital management, with more than half of the stocks that make up the S-REIT sector included in the FTSE EPRA Nareit Developed Index.
