S-REITs With Office Assets Among Top Performers
SINGAPORE – The top 5 performing Singapore-listed real estate investment trusts (S-REITs) and property trusts saw an average overall return of 14.1 percent during the first quarter of the year, surpassing the Straits Times Index’s (STI) return of 9.6 percent, according to a recent report published by Singapore Exchange (SGX) that was published on The Business Times on Sunday evening (3 April, SGT).
They are Suntec REIT (17.6 percent), Frasers Hospitality Trust Frasers (15.1 percent), Far East Hospitality Trust (13.1 percent), CDL Hospitality Trusts (13.0 percent), and Ascott Residence Trust (11.5 per cent).
SGX noted that these S-REITs and real estate trusts are primarily from the office and hospitality and sub-segments.
“Drivers that potentially drove the sub-segments were the continued reopening theme and relaxation of COVID measures across Singapore and the region, as well as the positive momentum in office rental rates,” stated the local bourse in its report.
Moreover, SGX highlighted the better performance of S-REITs with office assets in their portfolio. Notably, there are 5 S-REITs that own local office properties, namely pure-play office S-REIT Keppel REIT, as well as diversified S-REITs, namely Suntec REIT, OUE Commercial Reit (OUE C-REIT), Mapletree Commercial Trust (MCT), and CapitaLand Integrated Commercial Trust (CICT).
In particular, Keppel REIT saw a tenant retention rate of 62 percent in fiscal year 2021, and it noted that a majority of its new and expansion leases were in Singapore.
In addition, its weighted average signing rent for office leases here was roughly S$10.56 psf per month. Also, building valuations for Marina Bay Financial Centre Towers 1 & 2, One Raffles Quay, and Keppel Bay Tower increased because of higher rental rates.
Meanwhile, OUE C-REIT, which owns 3 office properties in Singapore’s central business district (CBD), stated in its FY2021 results that the average passing rents of its local office asset as of December 2021 were higher on an annual basis, with OUE Bayfront hitting a high of S$12.49 psf due to the successful renewal of an anchor tenant. The REIT also anticipates positive leasing momentum to continue this year, supported by tech firms amid a limited supply pipeline.
As for CICT, it recently announced the proposed acquisition of a 70 percent stake in the 79 Robinson Road office building, which has an occupancy level of 92.9 percent. The purchase is expected to provide pro forma annualised net property income (NPI) yield of 4 percent and distribution per unit accretion of 2.9 percent. The transaction is expected to be completed during the 2nd quarter of 2022.