• The iEdge S-REIT Index has seen a comparatively defensive 1.4% total return in the 2022 YTD, while the FTSE EPRA NAREIT Global REITs Index declined 15.8%. This has been a turnaround from comparative performances in 2H21, which saw a 1.6% total return for the iEdge S-REIT Index, while the global benchmark gained 12.5%.

• The strongest performing S-REIT segment in the 2022 YTD was Hospitality, represented by five stapled trusts that averaged 18.2% total returns with S$16 million of net institutional inflow. This coincided with outlook upgrades to RevPAR (revenue per available room) for the Singapore focused plays, as re-opening momentum etched higher.

• With a 43.5% YTD total return, Frasers Hospitality Trust has also been the best performing APAC-listed REIT in the 2022 YTD. This morning, a wholly-owned subsidiary of Frasers Property has proposed to privatise Frasers Hospitality Trust through a trust scheme of arrangement at a consideration of 70 cents per unit.

• Far East Hospitality Trust, Ascott Residence Trust and CDL Hospitality Trusts, in addition to Diversified REIT, Suntec REIT, have also ranked among APAC’s 20 strongest performing REITs in the 2022 YTD. Singapore’s largest S-REIT by market value, CapitaLand Integrated Comm Trust has been the next best performing S-REIT with a 9% total return.

20 Years of Significant Growth for the S-REIT Sector

July 17 will mark 20 years since its Singapore’s initial REIT, CapitaLand Integrated Commercial Trust, formerly known as CapitaLand Mall Trust and CapitaMall Trust, listed on SGX. The IPO raised more than S$200 million, with an initial offer price at S$0.96 per unit and the offer five times subscribed. At the time of listing, the then Retail-focused REIT owned three shopping malls –Tampines Mall, Junction 8 and Funan The IT Mall with a portfolio value of S$900 million. Today, CapitaLand Integrated Comm Trust remains Singapore’s largest REIT by market value, and amongst the largest in Asia Pacific, with a portfolio value in excess of S$20 billion, maintaining 10.8% average annualised total returns since its debut. 

The S-REIT Sector has grown significantly over the past 20 years, providing investors with exposures to a wide span of property classes that have seen diverse returns in recent years. While data centre and industrial REITs outpaced in 2020 into 2021 on demand for cloud services and resilient manufacturing activity, Singapore’s hospitality stapled trusts have been the strongest segment of the S-REIT Sector in the 2022 year to 10 June, with re-opening momentum supporting brighter for outlooks RevPAR (revenue per available room), for the four stapled trusts with Singapore properties.

As tabled below, unlike recent years, data centres and industrial REITs have been the least performing segments of the S-REIT sector, while the Hospitality segment comprised of five stapled trusts has been the strongest performing segment.

*note Mapletree Industrial Trust included as Industrial. Mkt Cap, Div. Yield, Debt/Asset Ratio and P/B based on 31 May data, net institutional flow and total return data based on 10 June data. Sources: SGX, Refinitiv, Bloomberg.

With a 43.5% total return in 2022 through to 10 June, Frasers Hospitality Trust has also been the best performing APAC-listed REIT for the past 23 weeks. This morning, a wholly-owned subsidiary of Frasers Property has proposed to privatise Frasers Hospitality Trust through a trust scheme of arrangement at a consideration of 70 cents per unit.

Note:^# Stapled Trusts. Mkt Cap, Div. Yield, Debt/Asset Ratio and P/B based on 31 May data, net institutional flow and total return data based on 10 June data. Sources: SGX, Refinitiv, Bloomberg.

S-REITs Featured Amongst APAC’s Strongest Performing REITs YTD

Far East Hospitality Trust, Ascott Residence Trust and CDL Hospitality Trusts, in addition to Diversified REIT, Suntec REIT, have also ranked among Asia Pacific’s 20 strongest performing REITs in the 2022 year to 10 June. The aforementioned CapitaLand Integrated Commercial Trust was the next best performing S-REIT with a 9.0% total return, excluding Mapletree North Asia Commercial Trust, which had its last day of trading on 8 June.

With the aforementioned CapitaLand Integrated Commercial Trust constituting an 11% heavyweight in of the iEdge S-REIT Index, its 9.0% total return has had a significant impact on the iEdge S-REIT Index’s comparatively defensive 1.4% total return in the 2022 year to 10 June. Meanwhile the FTSE EPRA NAREIT Global REITs Index, (of which Singapore accounts for a 3% weight), has declined 15.8% over the past 23 weeks. This has been a turnaround from comparative performances in the second half, which saw a 1.6% total return for the iEdge S-REIT Index, while the FTSE EPRA NAREIT Global REITs Index gained 12.5%.

The turnaround in comparative performances has coincided with the different timetables in global re-openings. As REIT Watch noted in May, tenant sales for Retail S-REITs were back at pre-Covid levels in 1Q22, while most of the hospitality trusts with Singapore assets reported higher RevPAR in 1Q22, due to growth in average daily rates and occupancy. In addition, the hawkish outlook for interest rates across much of the world (with the exception of China and Japan) has put the lens on gearing ratios, which as tabled below are on average at 36.9%, some 13.1% below the regulatory threshold, while on average, close to 75% of S-REIT current debts are entered directly in fixed rates or hedged through floating-to-fixed interest rate swaps.

Note:^# Stapled Trusts, ^ Business Trusts. Mkt Cap, Div. Yield, Debt/Asset Ratio and P/B based on 31 May data, net institutional flow and total return data based on 10 June data. Sources: SGX, Refinitiv, Bloomberg. ***Note Mapletree North Asia Commercial Trust last day of trading was 8 June 2022.