SGX Market Updates

New Significant Supportive Measures for S-REITs


17 April 2020

  • MOF, IRAS & MAS have announced new measures for S-REITs –

    1. distribution timeline extensions to qualify for tax transparency,
    2. leverage limit raised from 45% to 50% and
    3. defer implementation of a new minimum interest coverage ratio (ICR) requirement to 2022.

  • The measures are expected to support S-REIT managers in their capital management, adding further flexibility to manage cash flows. Focus will be on DPUs and industry outlooks as S-REITs report quarter earnings over the next few weeks.

  • The FTSE ST REIT Index opened up 3% on 17 April, after declining 20% in the 2020 YTD through to 16 April, trimming its longer term 10 year annualised total returns to 8%, which has been in-line with regional REIT Indices.

To support S-REITs during these challenging times, MOF, IRAS and MAS have jointly announced new measures on 16 April. These new measures include:

  1. Extension of timeline for S-REITs to distribute at least 90% of their taxable income from 3 months to 12 months (after the end of FY2020) to qualify for tax transparency;

  2. Increasing leverage limit from 45% to 50%; and

  3. Defer of implementation of a new minimum interest coverage ratio (ICR) requirement to 1 Jan 2022.

The new measures, together with enhanced share issue limit announced by SGX RegCo last week, will provide S-REITs more flexibility to access various funding options and manage cash flows. With active capital management by REIT managers, S-REITs have maintained an average Debt to Asset ratio of 35.3%, based on latest company data as of 31 March 2020. Raising the leverage limit may provide S-REITs more flexibility to manage their capital structure.

List of 10 S-REITs with highest debt-to-asset ratios

Name SGX
Mkt Cap
2020 YTD
Daily Turnover
17 Apr
Morning Session
Price Change
Debt to Assets
ESR-REIT J91U 1,196 8,652 5.9% 41.5
OUE COMMERCIAL REIT TS0U 2,218 1,765 4.9% 40.3
CACHE LOGISTICS TRUST K2LU 573 1,502 2.9% 40.1
IREIT GLOBAL UD1U 423 1,984 0.8% 39.3
FAR EAST HOSPITALITY TRUST Q5T 927 2,242 5.3% 39.2
EC WORLD REIT BWCU 507 1,255 1.6% 38.7
MANULIFE US REIT BTOU 1,594 8,190 2.5% 37.7
SUNTEC REIT T82U 3,723 23,855 6.8% 37.7
Average 3.6% 39.1
Median 3.0% 39.0

Source: Thomson Reuters, Company data (Data as of 16 April 2020).
Price Change based on S$-terms.
Note: Debt/Asset metrics taken from Company data as of 31 March 2020.

S-REITs 10-year annualised returns remains above global REITs average

In the 2020 year-to-date through to 16 April, the FTSE ST REIT Index declined 19.8%, in line with the average 22.2% decline among global REIT indices. Annualised 10 year total returns of FTSE ST REIT Index was also trimmed to 8.0% but remained slightly above the average of 7.2% for global REIT indices.

Regional REIT Indices Annualised 10 Year Total Return

The FTSE ST REIT Index is currently trading at a Price-to-Book ratio of 0.96x (below its 10 year average of 1.01x) and a forward dividend yield spread of 5.15% against Singapore 10 year Benchmark Government Bond Yield, above the STI forward dividend yield spread of 3.92%.

FTSE ST REIT Index Yield Spread

S-REITs with majority of their retail properties Singapore

These 7 S-REITs averaged a decline of 29.2% for the 2020 year to date session through to 16 April. In the morning session of 17 April, they rebounded an average of 5.3% from the previous day.

Name SGX
Mkt Cap
Geographic Breakdown
by Asset Portfolio
YTD Price
as of
16 April
Price Return
on 17 April
Morning Session
CAPITALAND MALL TRUST C38U 6,553 100% SG -28.0% 6.8%
SUNTEC REIT T82U 3,723 89% SG, 11% AU -28.3% 6.8%
FRASERS CENTREPOINT TRUST J69U 2,265 100% SG -28.1% 7.4%
SPH REIT SK6U 2,185 81% SG, 19% AU -26.2% 3.2%
STARHILL GLOBAL REIT P40U 1,064 68.7% SG, 15.9% AU,
12.6% MY, 2.8% CN & JP
-33.1% 4.1%
LENDLEASE GLOBAL COMMERCIAL REIT JYEU 710 71.5% SG, 28.5% Italy -34.9% 3.3%
Average     -29.2% 5.3%
Median     -28.1% 5.6%

Source: Thomson Reuters, Company data (Data as of 16 April 2020).
Price change based on S$-terms.
Note: Geographic breakdown by asset portfolio taken from Company data as 31 March 2020.

All eyes on upcoming S-REITs quarterly earnings

S-REITs are expected to release their March quarterly earnings in the coming weeks and focus outlooks on multiple areas, from continued maintenance of strong tenant relationships, to utilising balance sheets for the most effective cash flows. The new measure also requires S-REITs to disclose leverage ratios and ICRs in annual reports and interim financial results, to provide investors with timely information on their risk profiles.

Refer to weekly Economic Calendar for the latest S-REITs earnings schedule.

See also 2020 March Quarter S-REIT Earnings Schedule.

Read also

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