Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income





To help S-REITs better compete against private capital and their foreign peers when making asset acquisitions, the MAS has indicated it is considering raising the current leverage limit of 45%. 
	 
	
Currently, the 34 S-REITs average a debt-to-asset ratio of about 34%-35%. Based on indicative data extracted from their latest published financial statements and/or annual reports, these REITs may have the capacity to take on additional working capital of approximately S$8.3 billion and S$15.4 billion, if they boosted leverage ratios to 40% and 45% respectively. 
	 
	
If Singapore’s central bank lifts the leverage limit to 50%, this could create combined working capital of approximately S$22.5 billion for the 34 S-REITs. REITs typically take on debt to fund capital-intensive acquisitions – which allows them to grow their portfolios both domestically and internationally – as well as asset enhancement initiatives. Such strategies help boost distributions for unit holders.  
	 
	Among the 34 REITs, Parkway Life REIT has the lowest all-in debt cost of 0.9% and highest ICR of 13.2x. Another three trusts – Cromwell European REIT, Keppel DC REIT and IREIT Global – also have low all-in debt cost levels coupled with high interest cover ratios.

SGX lists 34 REITs, seven stapled trusts and three property trusts with a combined market capitalisation of more than S$100 billion. S-REITs was the top net buy sector in January-June 2019, drawing net institutional inflows of S$396.3 million.

REIT popularity in Singapore is exemplified in multiple ways – they comprise one-tenth of Straits Times Index (STI) constituents, all of the STI Reserve List stocks, approximately one-tenth of the total market capitalisation of stocks listed on SGX, and a quarter of the top 20 stocks by turnover on a day-to-day basis.

To help Singapore REITs better compete against private capital and their foreign peers when making asset acquisitions, the Monetary Authority of Singapore (MAS) has indicated that it is considering raising the current leverage limit of 45%.

“The industry has provided feedback that at the current leverage limit of 45%, REITs face challenges when competing against other bidders such as private equity funds, property companies and foreign REITs. These bidders often have more flexibility to use debt to optimise their capital structure,” Abigail Ng, Executive Director of the Monetary Authority of Singapore, said in a speech at the REITAS Conference 2019 last week.

“Some have also pointed out that other REIT jurisdictions have higher or no leverage limits. We have undertaken a review of this area, and we see some room for recalibration,” she added.

Singapore’s central bank also noted that one possible approach is to use a combination of leverage limit and minimum interest cover requirement (ICR) in determining the amount of leverage REITs can take on. They may take on higher leverage if they are able to meet a minimum ICR.

Leverage, defined as the debt-to-asset ratio, measures how well-capitalised the trust is. The ICR measures the REIT’s debt-servicing ability, and is calculated by dividing its net property income by interest expense.

The MAS is considering allowing a REIT's leverage to exceed 45%, but not breach the 50% mark, if the REIT has a minimum ICR of 2.5 times after taking into account interest payments arising from the new debt.

Previously, S-REITs could borrow up to 35% of their total assets, with the limit bumped up to 60% if it obtained a credit rating from a ratings agency and disclosed it to the investing public. In 2015, the central bank replaced this with a single-tier leverage limit of 45%.

Currently, the 34 REITs on SGX average a debt-to-asset ratio of about 34%-35%. Based on indicative data extracted from their latest published financial statements and/or annual reports, these S-REITs may have capacity to take on additional working capital of approximately S$8.3 billion and S$15.4 billion if they boosted leverage ratios to 40% and 45% respectively. If Singapore’s central bank lifts the leverage limit to 50%, this could create combined working capital of approximately S$22.5 billion for the S-REITs.

REITs typically take on debt to fund capital-intensive acquisitions – which allows them to grow their portfolios both domestically and internationally – as well as asset enhancement initiatives (AEIs) that include refurbishment of aged properties. Such strategies help to boost distributions for unit holders.

The table below details the debt profiles of the 34 REITs on SGX, sorted by name.



			Name
			
			
			Weighted Average Debt Tenor (Yrs)
			
			
			Interest Coverage Ratio (x)
			
			
			All-in Debt Cost (%)
			
			
			Total Debt (S$M)
			
			
			Total Assets (S$M)
			
			
			Debt/Asset Ratio (%) 
			
		


			AIMS APAC REIT
			
			
			2.4
			
			
			5.0
			
			
			3.6
			
			
			499.7
			
			
			1,484.8
			
			
			33.7
			
		


			ASCENDAS REIT
			
			
			4.0
			
			
			5.2
			
			
			3.0
			
			
			4,141.0
			
			
			11,414.0
			
			
			36.3
			
		


			ASCOTT RESIDENCE TRUST
			
			
			3.6
			
			
			4.5
			
			
			2.1
			
			
			1,905.5
			
			
			5,300.0
			
			
			35.7
			
		


			BHG RETAIL REIT
			
			
			NA
			
			
			NA
			
			
			4.2
			
			
			226.1
			
			
			695.3
			
			
			32.5
			
		


			CACHE LOGISTICS TRUST
			
			
			3.8
			
			
			4.3
			
			
			3.9
			
			
			494.2
			
			
			1,412.7
			
			
			37.4
			
		


			CAPITALAND COMMERCIAL TRUST
			
			
			3.6
			
			
			5.8
			
			
			2.5
			
			
			3,904.0
			
			
			11,101.5
			
			
			35.2
			
		


			CAPITALAND MALL TRUST
			
			
			4.2
			
			
			4.9
			
			
			3.2
			
			
			3,664.1
			
			
			11,613.5
			
			
			34.4
			
		


			CAPITALAND RETAIL CHINA TRUST
			
			
			3.1
			
			
			5.0
			
			
			3.0
			
			
			1,074.0
			
			
			3,111.5
			
			
			35.5
			
		


			CROMWELL EUROPEAN REIT
			
			
			2.7
			
			
			9.2
			
			
			1.4
			
			
			1,030.0
			
			
			2,768.1
			
			
			37.0
			
		


			EC WORLD REIT
			
			
			NA
			
			
			NA
			
			
			4.9
			
			
			476.9
			
			
			1,515.8
			
			
			31.3
			
		


			ESR-REIT
			
			
			2.8
			
			
			3.7
			
			
			4.0
			
			
			1,268.2
			
			
			3,050.7
			
			
			42.0
			
		


			FIRST REIT
			
			
			2.2
			
			
			NA
			
			
			4.0
			
			
			492.8
			
			
			1,428.0
			
			
			34.5
			
		


			FORTUNE REIT*
			
			
			NA
			
			
			NA
			
			
			2.9
			
			
			1,544.8
			
			
			7,433.8
			
			
			20.9
			
		


			FRASERS CENTREPOINT TRUST
			
			
			2.4
			
			
			6.0
			
			
			2.8
			
			
			813.0
			
			
			2,840.4
			
			
			28.8
			
		


			FRASERS COMMERCIAL TRUST
			
			
			2.6
			
			
			4.7
			
			
			3.0
			
			
			627.6
			
			
			2,158.2
			
			
			29.1
			
		


			FRASERS LOGISTICS &amp; INDUSTRIAL TRUST
			
			
			2.4
			
			
			7.5
			
			
			2.4
			
			
			1,036.4
			
			
			2,968.6
			
			
			35.1
			
		


			IREIT GLOBAL
			
			
			6.8
			
			
			10.0
			
			
			1.5
			
			
			304.2
			
			
			804.9
			
			
			38.0
			
		


			KEPPEL DC REIT
			
			
			3.3
			
			
			12.9
			
			
			1.7
			
			
			746.4
			
			
			2,260.2
			
			
			32.5
			
		


			KEPPEL REIT
			
			
			3.3
			
			
			4.1
			
			
			2.9
			
			
			2,930.0
			
			
			8,380.0
			
			
			35.7
			
		


			KEPPEL-KBS US REIT
			
			
			3.6
			
			
			4.7
			
			
			3.8
			
			
			573.4
			
			
			1,513.8
			
			
			38.1
			
		


			LIPPO MALLS INDONESIA RETAIL TRUST
			
			
			2.0
			
			
			NA
			
			
			Excl. perps 5.1; Incl. perps 5.6
			
			
			674.5
			
			
			2,004.3
			
			
			33.9
			
		


			MANULIFE US REIT
			
			
			2.5
			
			
			3.9
			
			
			3.3
			
			
			911.9
			
			
			2,440.0
			
			
			37.6
			
		


			MAPLETREE COMMERCIAL TRUST
			
			
			3.6
			
			
			4.5
			
			
			3.0
			
			
			2,349.0
			
			
			7,100.8
			
			
			33.1
			
		


			MAPLETREE INDUSTRIAL TRUST
			
			
			4.4
			
			
			6.5
			
			
			3.0
			
			
			1,559.5
			
			
			4,607.1
			
			
			33.8
			
		


			MAPLETREE LOGISTICS TRUST
			
			
			4.1
			
			
			4.9
			
			
			2.7
			
			
			2,993.7
			
			
			8,078.3
			
			
			37.7
			
		


			MAPLETREE NORTH ASIA COMMERCIAL TRUST
			
			
			3.7
			
			
			4.2
			
			
			2.5
			
			
			2,867.9
			
			
			7,820.4
			
			
			36.6
			
		


			OUE COMMERCIAL REIT
			
			
			3.3
			
			
			3.3
			
			
			3.5
			
			
			1,723.2
			
			
			4,581.4
			
			
			39.4
			
		


			PARKWAYLIFE REIT
			
			
			3.3
			
			
			13.2
			
			
			0.9
			
			
			687.1
			
			
			1,892.2
			
			
			36.4
			
		


			SABANA SHARIAH INDUSTRIAL REIT
			
			
			1.1
			
			
			3.9
			
			
			4.2
			
			
			319.0
			
			
			1,023.3
			
			
			33.9
			
		


			SASSEUR REIT
			
			
			3.8
			
			
			5.1
			
			
			4.5
			
			
			513.0
			
			
			1,768.7
			
			
			29.2
			
		


			SOILBUILD BUSINESS SPACE REIT
			
			
			3.1
			
			
			3.9
			
			
			3.5
			
			
			480.1
			
			
			1,248.0
			
			
			39.3
			
		


			SPH REIT
			
			
			2.1
			
			
			NA
			
			
			2.9
			
			
			1,093.7
			
			
			3,619.7
			
			
			30.1
			
		


			STARHILL GLOBAL REIT
			
			
			3.0
			
			
			3.8
			
			
			3.3
			
			
			1,132.0
			
			
			3,168.0
			
			
			35.7
			
		


			SUNTEC REIT
			
			
			3.3
			
			
			2.9
			
			
			3.0
			
			
			3,548.7
			
			
			9,537.4
			
			
			38.6
			
		

Source: Latest published financial statements, presentation material and/or annual reports 
NA: Not Available 
Note: Cromwell, IREIT, Fortune, Frasers Logistics, Manulife and Keppel-KBS report in EUR, HKD, AUD and USD respectively with SGD values shown in table *Fortune REIT, which is dual-listed on HKEx, plans to delist from SGX

Among the 34 REITs, Parkway Life REIT has the lowest all-in debt cost of 0.9% and the highest ICR of 13.2 times. Another three trusts have low all-in debt cost levels coupled with high interest cover – Cromwell European REIT has all-in debt cost of 1.4% and ICR of 9.2 times, Keppel DC REIT has all-in debt cost of 1.7% with ICR of 12.9 times, while IREIT Global has all-in debt cost of 1.5% with ICR of 10.0 times.

The table below details the performances of the 34 REITs listed on SGX, sorted by market capitalisation.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
			
			Total Return 3Y (%)
			
			
			12M Div Ind Yld (%)
			
			
			P/B (x)
			
		


			CapitaLand Mall Trust
			
			
			C38U
			
			
			9,996
			
			
			22.1
			
			
			37.2
			
			
			13.6
			
			
			4.4
			
			
			1.1
			
		


			Ascendas REIT
			
			
			A17U
			
			
			9,681
			
			
			24.3
			
			
			23.4
			
			
			14.3
			
			
			5.2
			
			
			1.2
			
		


			CapitaLand Commercial Trust
			
			
			C61U
			
			
			8,474
			
			
			32.2
			
			
			36.7
			
			
			20.8
			
			
			4.0
			
			
			1.0
			
		


			Mapletree Commercial Trust
			
			
			N2IU
			
			
			6,050
			
			
			29.9
			
			
			38.6
			
			
			18.9
			
			
			4.4
			
			
			1.1
			
		


			Mapletree Logistics Trust
			
			
			M44U
			
			
			5,924
			
			
			33.1
			
			
			36.8
			
			
			24.3
			
			
			5.0
			
			
			1.0
			
		


			Suntec REIT
			
			
			T82U
			
			
			5,533
			
			
			14.8
			
			
			20.0
			
			
			9.1
			
			
			4.9
			
			
			0.9
			
		


			Mapletree Industrial Trust
			
			
			ME8U
			
			
			4,654
			
			
			24.1
			
			
			24.1
			
			
			15.6
			
			
			5.4
			
			
			1.4
			
		


			Mapletree North Asia Commercial Trust
			
			
			RW0U
			
			
			4,645
			
			
			32.0
			
			
			34.4
			
			
			19.9
			
			
			5.1
			
			
			0.8
			
		


			Keppel REIT
			
			
			K71U
			
			
			4,355
			
			
			14.9
			
			
			22.0
			
			
			11.6
			
			
			4.4
			
			
			0.8
			
		


			Fortune REIT
			
			
			F25U
			
			
			3,695
			
			
			26.2
			
			
			25.8
			
			
			10.3
			
			
			4.7
			
			
			0.7
			
		


			Frasers Centrepoint Trust
			
			
			J69U
			
			
			2,973
			
			
			27.4
			
			
			28.5
			
			
			14.6
			
			
			4.1
			
			
			1.1
			
		


			SPH REIT
			
			
			SK6U
			
			
			2,845
			
			
			13.0
			
			
			16.8
			
			
			11.3
			
			
			5.0
			
			
			1.1
			
		


			Ascott Residence Trust
			
			
			A68U
			
			
			2,805
			
			
			23.5
			
			
			27.1
			
			
			13.1
			
			
			5.5
			
			
			0.8
			
		


			Frasers Logistics &amp; Industrial Trust
			
			
			BUOU
			
			
			2,615
			
			
			29.1
			
			
			27.4
			
			
			17.6
			
			
			6.4
			
			
			1.2
			
		


			Keppel DC REIT
			
			
			AJBU
			
			
			2,326
			
			
			30.7
			
			
			30.5
			
			
			20.5
			
			
			4.3
			
			
			1.5
			
		


			Parkway Life REIT
			
			
			C2PU
			
			
			1,839
			
			
			18.3
			
			
			16.7
			
			
			9.9
			
			
			4.3
			
			
			1.6
			
		


			Cromwell European REIT
			
			
			CNNU
			
			
			1,830
			
			
			16.1
			
			
			-4.1
			
			
			N/A
			
			
			12.7
			
			
			1.0
			
		


			ESR-REIT
			
			
			J91U
			
			
			1,825
			
			
			11.5
			
			
			16.4
			
			
			7.4
			
			
			7.3
			
			
			0.8
			
		


			Starhill Global REIT
			
			
			P40U
			
			
			1,734
			
			
			20.5
			
			
			29.3
			
			
			6.5
			
			
			5.6
			
			
			0.8
			
		


			Manulife US REIT
			
			
			BTOU
			
			
			1,672
			
			
			21.4
			
			
			12.6
			
			
			10.9
			
			
			5.9
			
			
			1.2
			
		


			CapitaLand Retail China Trust
			
			
			AU8U
			
			
			1,588
			
			
			20.9
			
			
			14.4
			
			
			8.8
			
			
			6.5
			
			
			1.0
			
		


			OUE Commercial REIT
			
			
			TS0U
			
			
			1,518
			
			
			18.2
			
			
			-6.9
			
			
			2.6
			
			
			6.1
			
			
			0.6
			
		


			Frasers Commercial Trust
			
			
			ND8U
			
			
			1,513
			
			
			26.0
			
			
			30.3
			
			
			15.7
			
			
			5.7
			
			
			0.9
			
		


			AIMS APAC REIT
			
			
			O5RU
			
			
			1,020
			
			
			14.8
			
			
			15.6
			
			
			9.5
			
			
			7.0
			
			
			1.0
			
		


			Sasseur REIT
			
			
			CRPU
			
			
			953
			
			
			31.7
			
			
			31.5
			
			
			N/A
			
			
			8.3
			
			
			0.9
			
		


			Keppel-KBS US REIT
			
			
			CMOU
			
			
			872
			
			
			32.5
			
			
			2.8
			
			
			N/A
			
			
			7.7
			
			
			1.0
			
		


			Cache Logistics Trust
			
			
			K2LU
			
			
			852
			
			
			18.4
			
			
			13.5
			
			
			6.6
			
			
			7.5
			
			
			1.1
			
		


			First REIT
			
			
			AW9U
			
			
			832
			
			
			11.2
			
			
			-13.4
			
			
			0.4
			
			
			8.0
			
			
			1.3
			
		


			Lippo Malls Indonesia Retail Trust
			
			
			D5IU
			
			
			695
			
			
			37.2
			
			
			-17.4
			
			
			-4.6
			
			
			8.2
			
			
			1.0
			
		


			Soilbuild Business Space REIT
			
			
			SV3U
			
			
			659
			
			
			11.6
			
			
			3.0
			
			
			6.0
			
			
			8.3
			
			
			1.0
			
		


			EC World REIT
			
			
			BWCU
			
			
			605
			
			
			14.6
			
			
			15.6
			
			
			5.2
			
			
			8.2
			
			
			0.8
			
		


			IREIT Global
			
			
			UD1U
			
			
			495
			
			
			11.7
			
			
			10.7
			
			
			10.0
			
			
			7.4
			
			
			1.1
			
		


			Sabana Shari'ah Industrial REIT
			
			
			M1GU
			
			
			490
			
			
			23.5
			
			
			15.0
			
			
			8.0
			
			
			6.6
			
			
			0.8
			
		


			BHG Retail REIT
			
			
			BMGU
			
			
			351
			
			
			0.5
			
			
			2.3
			
			
			4.9
			
			
			7.4
			
			
			0.9
			
		

Source: Bloomberg &amp; StockFacts (data as of 8 July 2019) 
Note: Cromwell, IREIT, Fortune, Frasers Logistics, Manulife and Keppel-KBS report in EUR, HKD, AUD and USD respectively with SGD values shown in table 
*Fortune REIT, which is dual-listed on HKEx, plans to delist from SGX



Highlights of Debt Profiles of SGX’s 34 REITs

CapitaLand Ascendas REIT

Highlights of Debt Profiles of SGX’s 34 REITs