Real Estate, General Equities

Will Tan

Thematic (Sector/Industry)

Singapore Real estate / Thematic (Sector/Industry)

<div class="content-highlight"><p><strong>The Singapore REIT (S-REIT) market has grown tremendously since its inception in 2002 and has emerged as a REIT listing hub attracting overseas assets. With the numerous names in the sector now and various different property asset classes offering differing levels of yield, income stability, and growth; which are the ones that have delivered a stellar track record thus far and which are the name(s) that we like? </strong></p><p><strong>We initiate discussion on the sector by way of a Balanced Scorecard approach, qualitatively evaluating the various S-REITs and their respective track records to sieve out the outperformers thus far. </strong></p></div><ul><li>Based on this approach, the stellar names based on track record are <a href="https://www.smartkarma.com/entities/39" target="_blank" data-smartkarma-citation="entities:39:1">Ascendas Real Estate Investment Trust (AREIT SP)</a> and <a href="https://www.smartkarma.com/entities/105" target="_blank" data-smartkarma-citation="entities:105:1">Capitaland Mall Trust (CT SP)</a>. However, both names are facing headwinds, with A-REIT facing challenging demand-supply outlook while CMT has to navigate through the threat of e-commerce competition with the need to re-invent retail experience through omni-channel strategy for its retail mall portfolio.</li><li>Albeit a tad lower score than these two bellwether REITs attributed to exposure to the relatively more volatile office sector, we like <a href="https://www.smartkarma.com/entities/1077" target="_blank" data-smartkarma-citation="entities:1077:1">Capitaland Commercial Trust (CCT SP)</a> after its recent asset moves which position well to ride on the nascent recovery in the office sector. REIT is trading at circa 0.94x P/B with potential revaluation gains for its Asia Square Two acquisition, and 5.3% trading yield in our view is undemanding for its prime office exposure and impending office upcycle. </li><li>Notable mentions are i) <a href="https://www.smartkarma.com/entities/13422" target="_blank" data-smartkarma-citation="entities:13422:1">Parkwaylife Real Estate (PREIT SP)</a> with CPI-linked organic growth and has delivered on its Japan portfolio growth ii) The Mapletree sponsored <a href="https://www.smartkarma.com/entities/16035" target="_blank" data-smartkarma-citation="entities:16035:1">Mapletree Logistics Trust (MLT SP)</a> and <a href="https://www.smartkarma.com/entities/40" target="_blank" data-smartkarma-citation="entities:40:1">Mapletree Industrial Trust (MINT SP)</a> have a good track record of executing deals. </li><li>We also like <a href="https://www.smartkarma.com/entities/85" target="_blank" data-smartkarma-citation="entities:85:1">Keppel DC REIT (KDCREIT SP)</a> for its sector focus on data centres, good track record of acquisitions in various markets since listing and delivering DPU growth. However, we do not see much value on the table currently with the REIT trading at 1.4x P/B and 5.4% yield for listed data centre assets albeit delivered at low leverage &lt;30% levels. </li></ul>

The Singapore REIT (S-REIT) market has grown tremendously since its inception in 2002 and has emerged as a REIT listing hub attracting overseas assets. With the numerous names in the sector now and various different property asset classes offering differing levels of yield, income stability, and growth; which are the ones that have delivered a stellar track record thus far and which are the name(s) that we like? We initiate discussion on the sector by way of a Balanced Scorecard approach, qualitatively evaluating the various S-REITs and their respective track records to sieve out the outperformers thus far. Based on this approach, the stellar names based on track record are Ascendas Real Estate Investment Trust (AREIT SP) and Capitaland Mall Trust (CT SP). However, both names are facing headwinds, with A-REIT facing challenging demand-supply outlook while CMT has to navigate through the threat of e-commerce competition with the need to re-invent retail experience through omni-channel strategy for its retail mall portfolio.Albeit a tad lower score than these two bellwether REITs attributed to exposure to the relatively more volatile office sector, we like Capitaland Commercial Trust (CCT SP) after its recent asset moves which position well to ride on the nascent recovery in the office sector. REIT is trading at circa 0.94x P/B with potential revaluation gains for its Asia Square Two acquisition, and 5.3% trading yield in our view is undemanding for its prime office exposure and impending office upcycle. Notable mentions are i) Parkwaylife Real Estate (PREIT SP) with CPI-linked organic growth and has delivered on its Japan portfolio growth ii) The Mapletree sponsored Mapletree Logistics Trust (MLT SP) and Mapletree Industrial Trust (MINT SP) have a good track record of executing deals. We also like Keppel DC REIT (KDCREIT SP) for its sector focus on data centres, good track record of acquisitions in various markets since listing and delivering DPU growth. However, we do not see much value on the table currently with the REIT trading at 1.4x P/B and 5.4% yield for listed data centre assets albeit delivered at low leverage &lt;30% levels. 

Capitaland Integrated Commercial Trust (CICT SP)

S-REIT Balanced Scorecard: Which S-REIT Aced with Flying Colors?