Easing Of Workplace Restrictions

Easing Of Workplace Restrictions A Boon For S-REITs

SINGAPORE – The government’s announcement that up to 75 percent of a company employees can resume working in the office starting next Monday will benefit Singapore-listed real estate investment trusts (S-REITs) with significant exposure to office assets, reported The Business Times on Monday morning (29 March, SGT), citing data from the Singapore Exchange (SGX).

“As three quarters of the office community return to the office, we can expect to see higher footfall and usage of existing office spaces, compared to the earlier phases of the circuit breaker,” said Emelia Tan, who writes for the news agency’s REIT Watch.

She pointed out that there are 6 S-REITs with large exposure to Singapore office assets, namely Keppel REIT, Mapletree Commercial Trust, CapitaLand Integrated Commercial Trust, OUE Commercial REIT, and Suntec REIT, as well as Frasers Logistics & Commercial Trust.

With an overall market capitalisation of more than S$35 billion, which accounts for almost one-third of the entire S-REIT industry, these 6 entities have substantial exposure to office properties in the city state.

For instance, Keppel REIT has the highest exposure among the 6 as 76.2 percent of its total portfolio value comprises Singapore office assets. It is followed by Mapletree Commercial Trust (63.9 percent), CapitaLand Integrated Commercial Trust (62.7 percent), OUE Commercial REIT (59.5 percent), and Suntec REIT with 55.1 percent. Lastly, Frasers Logistics & Commercial Trust has the lowest exposure of 20.1 percent among the 6 entities.

In particular, Keppel REIT oversees more than S$8.2 billion worth of Grade A commercial properties in Singapore, South Korea, and Australia. Last December, it stated that it’s buying a 100 percent interest in Keppel Bay Tower, a Grade A office asset situated in the city-state’s HarbourFront/Alexandra submarket. Touted as Singapore’s first commercial project to be fully powered by renewable energy, the property has a committed occupancy rate of 98 percent.

Keppel REIT’s top 3 tenants by sectors consist of banking, insurance & financial services; government agencies; and technology, media & telecommunications, which occupies 63.8 percent of the entity’s committed net lettable area.

Meanwhile, Mapletree Commercial Trust owns 5 Singapore assets with an overall portfolio value of more than S$8.7 billion. Of these, 4 contain office components.

The entity also highlighted that its recently purchased Mapletree Business City Phase 2 is 99.4 percent occupied. Also, the property has seen its exposure to technology tenants increase from 5.1 percent to 19.3 percent based on gross rental income.

As for CapitaLand Integrated Commercial Trust, it is deemed as the biggest proxy for Singapore’s commercial property market as more than S$14.0 billion out of its S$22.3 billion assets under management (AUM) consists of offices and mixed-use assets in the city-state.

Notably, the REIT’s office occupancy in Singapore stands at 95.1 percent surpassing the core CBD occupancy level of 93.8 percent. It also expects to see higher rental take-up from Chinese tech firms and companies offering non-bank financial services. Furthermore, its management anticipates rentals to recover by the second half of this year, partly because of limited Grade A office stock.

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