There are 34 REITs, 6 stapled trusts and 3 property trusts listed on SGX. The sector has a combined market capitalisation of close to S$100 billion, with Retail, Industrial and Office REITs making up the three largest segments.
Between January 2017 and June 2018, eight REITs and one stapled trust have raised a total of S$2.7 billion in funds through rights issues, mostly to finance new property investments. They are: Frasers Logistics, Manulife REIT, ESR-REIT, CCT, Mapletree Logistics, Cache, CDL, Ascott Residence, and Sabana REIT.
In 3Q18, these nine trusts have registered a total return of +1.9%. This brings their 12M and 3Y total returns to -3.8% and +15.0% respectively. They have also averaged an aggregate leverage ratio of 35.6%, a dividend indicated yield of 6.9% and a price-to-book ratio of 0.9.
There are 34 Real Estate Investment Trusts (REITs), 6 stapled trusts and 3 property trusts listed on SGX. The sector has a combined market capitalisation of close to S$100 billion, with Retail, Industrial and Office REITs making up the largest segments.
Between January 2017 and June 2018, eight REITs and one stapled trust have raised a total of S$2.7 billion in funding through rights issues, mostly to finance new property investments. The nine trusts are: Frasers Logistics & Industrial Trust, Manulife US REIT, ESR-REIT, CapitaLand Commercial Trust, Mapletree Logistics Trust, Cache Logistics Trust, CDL Hospitality Trusts, Ascott Residence Trust, and Sabana Shari'ah Compliant Industrial REIT.
In particular, Manulife raised US$197.2 million via a rights issue to finance the purchase of two office properties in Washington DC and Georgia in the US, while Frasers Logistics raised S$147.1 million via a rights issue to fund the purchase of 21 European logistics properties in the Netherlands and Germany.
The table below details the nine trusts and their rights issues, sorted by date.
|Name||Rights Shares||Subscriptio Price||Currency||Amount Raised
|Frasers Logistics & Industrial Trust||152,153,437||0.967||SGD||147||1 right for 10 units held||Jun-18|
|Manulife US REIT||227,935,981||0.865||USD||268||22 rights for 100 units held||Jun-18|
|ESR-REIT||262,849,614||0.540||SGD||142||199 rights for 1,000 units held||Mar-18|
|CapitaLand Commercial Trust ~||513,540,228||1.363||SGD||700||166 rights for 1000 units held||Oct-17|
|Manulife US REIT||299,288,423||0.695||USD||283||41 rights for 100 units held||Oct-17|
|Mapletree Logistics Trust||250,187,292||1.145||SGD||286||1 right for 10 units held||Oct-17|
|Cache Logistics Trust||162,565,716||0.632||SGD||103||18 rights for 100 units held||Oct-17|
|CDL Hospitality Trusts ^||199,545,741||1.280||SGD||255||20 rights for 100 units held||Aug-17|
|Ascott Residence Trust||481,688,010||0.919||SGD||443||29 rights for 100 units held||Apr-17|
|Sabana Shari'ah Compliant Industrial REIT||310,712,244||0.258||SGD||80||42 rights for 100 units held||Jan-17|
In the July-September 2018 quarter, these nine trusts have registered a total return of +1.9%. This brings their 12-month and three-year total returns to -3.8% and +15.0% respectively. They have also averaged an aggregate leverage ratio of 35.6%, a dividend indicated yield of 6.9% and a price-to-book ratio of 0.9.
The tables below detail the nine trusts and their total returns, sorted by market capitalisation. Click on the stock name to view its profile in StockFacts.
|Name||SGX Code||Market Cap
|CapitaLand Commercial Trust||C61U||6,476.7||7.7||6.6||45.0|
|Mapletree Logistics Trust||M44U||4,383.2||2.0||0.6||46.6|
|Ascott Residence Trust||A68U||2,270.1||5.8||-7.6||9.2|
|Frasers Logistics & Industrial Trust||BUOU||2,107.2||1.9||-0.4||NA|
|CDL Hospitality Trusts||J85||1,794.8||4.8||-5.1||34.3|
|Manulife US REIT*||BTOU||1,344.5||-4.0||-8.6||NA|
|Cache Logistics Trust||K2LU||761.8||-2.7||-9.0||-8.2|
|Sabana Shariah Compliant Industrial REIT||M1GU||437.0||-0.5||-4.8||-22.3|
|Name||SGX Code||Market Cap
|Dvd Ind Yld
|Aggregate Leverage Ratio
|Ratio as of|
|CapitaLand Commercial Trust||C61U||6,476.7||4.9||0.9||35.3||30-Sep|
|Mapletree Logistics Trust||M44U||4,383.2||6.4||1.0||38.1||30-Sep|
|Ascott Residence Trust||A68U||2,270.1||6.6||0.7||35.7||30-Jun|
|Frasers Logistics & Industrial Trust||BUOU||2,107.2||7.2||1.1||36.3||30-Jun|
|CDL Hospitality Trusts||J85||1,794.8||6.4||1.0||33.2||30-Jun|
|Manulife US REIT*||BTOU||1,344.5||6.6||0.9||37.3||30-Jun|
|Cache Logistics Trust||K2LU||761.8||8.5||0.9||35.6||30-Sep|
|Sabana Shariah Compliant Industrial REIT||M1GU||437.0||8.0||0.8||38.6||30-Sep|
As REITs are obliged to pay out a minimum 90% of their income in distributions to enjoy tax exemptions, they may not be able to build up sufficient internal cash resources to purchase high-quality and yield-accretive assets for growth. As a result, apart from bank loans, REITs may raise funds for such investments through rights issues.
SGX-listed trusts have a gearing ratio limit of 45% set by the Monetary Authority of Singapore (MAS). Gearing or aggregate leverage ratio is calculated via dividing the trust’s total debt by its total assets. Equity fund-raising through rights issues is one way to keep debt levels – and gearing ratios – within the regulatory cap.
Singapore REITs are also facing a higher interest-rate environment. Since January 2017, the Federal Reserve has raised US interest rates six times – with the most recent hike in September. The Fed has signalled its intention to raise rates again in December, and three more times next year, assuming the world’s largest economy continues to grow moderately and inflation remains in check.
Despite the less-than-favourable backdrop, analysts have noted revived investor interest in REITs recently. This is driven by a flight to safety amidst rising risk-aversion, following ongoing US-Sino trade tensions, fears over Italy’s budget woes and the upcoming US mid-term elections. Sentiment has also been boosted by improving fundamentals in the domestic office and hotel property segments, DBS Group Research noted in a sector report published on 24 Aug 2018.
DBS Research pointed to “green shoots” across all real estate subsectors, noting that the office segment remains its preferred sector as a result of a sustained improvement in office rents. For the retail sector, the pace of negative rental revisions has moderated, while industrial rents are bottoming, with the odds of a recovery next year increasing, it added.
Did You Know
REITs and Stapled Trusts invest in a diversified pool of professionally managed real estate assets and raise capital to purchase primarily real estate assets, usually with a view to generate income for unit holders of the fund. Like stocks, REITs and Stapled Trusts have market risk – unit prices can move against the investor’s expectations. Other risks associated with a REIT or Stapled Trust investment can vary, and depend on the unique characteristics of each Trust (i.e. leverage ratio, cost of refinancing, alignment of management fees), as well as the geographical location and quality of the underlying property assets (i.e. concentration of properties, length of lease). Other risks associated with stock investing (i.e. price risk, volatility and liquidity risks) also apply.