In October, the global real estate investment trust (Reit) sector broadly underperformed with the FTSE EPRA Nareit Developed Index declining 4.6 per cent. Similarly in Singapore, the iEdge S-Reit Index was down 7.2 per cent. Institutional investors net sold S$224 million of S-Reits while retail investors net bought S$275 million.

Despite the underperformance of the sector in October, the six S-Reits in the Straits Times Index (STI) have been more resilient. STI S-Reits averaged 6.2 per cent declines and recorded retail net inflows of S$148 million. Frasers Logistics & Commercial Trust was the only Reit which received net inflows from both retail (S$10 million) and institutional (S$2 million) investors.

All six S-Reits within the STI have reported for the latest earnings season. While financial performance varied across the six, a majority recorded growth in occupancy rates and rental reversions, and maintained healthy balance sheet ratios. The average gearing ratio of the six S-Reits was at 37.6 per cent as of end-September 2023.

CapitaLand Ascendas Reit (Clar) reported that its aggregate leverage increased slightly from 36.7 per cent as of end-June 2023 to 37.2 per cent as of end-September 2023. However, it was able to maintain its year-to-date weighted average all-in debt cost at 3.3 per cent.

Overall, Clar’s portfolio occupancy rate increased marginally by 0.1 per cent quarter on quarter. The largest increase was seen in the Singapore portfolio, with occupancy rate growing by 0.4 per cent quarter on quarter. On the other hand, the largest decline was recorded in the Australia portfolio, with occupancy rate declining by 0.5 per cent quarter on quarter.

Average portfolio rent reversion of leases in the third quarter of 2023 for Clar was 10.2 per cent, largely contributed by assets in the UK and Europe, which saw rent reversion of 28.8 per cent. Clar expects rental reversions for overall FY2023 to come in at the positive high-single-digit range.

CapitaLand Integrated Commercial Trust (CICT) saw Q3 2023 gross revenue increase 4.6 per cent year on year. This was offset by a rise in operating expenses largely due to higher actual occupancy and shopper traffic. As a result, net property income (NPI) for the period grew slightly by 0.6 per cent year on year.

CICT’s aggregate leverage increased slightly from 40.4 per cent as of end-June 2023 to 40.8 per cent as of end-September 2023. Average cost of debt for the Reit increased marginally from 3.2 per cent to 3.3 per cent.

In terms of operating performance, CICT saw occupancy rate increase 0.6 per cent quarter on quarter, largely contributed by the 1 per cent increase in its office portfolio.

Frasers Logistics & Commercial Trust (FLCT) wrapped up its FY2023 with a 6.5 per cent decline in revenue, translating to 9 per cent and 7.6 per cent declines in adjusted NPI and distribution per unit (DPU), respectively. FLCT noted that the declines were mainly due to weaker exchange rates, lower average occupancies at certain assets as well as higher energy and utility expenses.

As at end-September 2023, FLCT’s aggregate leverage was at 30.2 per cent, up from 28.6 per cent as at end-June 2023. Its full year cost of borrowings was 2.2 per cent per annum with 77.2 per cent of borrowings at fixed rates. It has no major refinancing due in the first half of FY2024, with over 98 per cent of debt maturing for the year due in H2 FY2024.

FLCT’s overall portfolio occupancy rate was at 96 per cent as of end-September 2023, with its logistics and industrial segment fully occupied.

Refer to the Reit Watch article “Mapletree S-Reits’ scorecards reflect operational resilience despite global slowdown” for more information on the results of the three Mapletree S-Reits, which are also part of the STI.

Source: SGX Research S-Reits & Property Trusts Chartbook.

REIT Watch is a weekly column on The Business Times, read the original version.

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