Review of 7 Diversified Real Estate Investment Trusts (Part 1)

Diversified Real Estate Investment Trusts (“REITs”) are established with the investment strategy to own and manage a mix of property types and collect rent from tenants.

Some of the properties that are owned by these Diversified REITs comprises of:

• Retail

• Offices

• Data Centres

• Integrated Development

• Business and Science Park

• Light Industrial/Logistics Self-Storage

With a diversified portfolio of assets under their portfolio, this could potentially allow the REIT to be more resilient and less dependent on a particular sector of the properties.

Hence, here are 7 such Industrial REITs that are listed on SGX:

• Ascendas REIT (SGX: A17U)

• Ascendas India Trust (SGX: CY6U)

• CapitaLand Integrated Commercial Trust (SGX: C38U)

• CapitaLand China Trust (SGX: AU8U)

• Cromwell European REIT (SGX: CNNU)

• Starhill Global REIT (SGX: P40U)

• United Hampshire US REIT (SGX: ODBU)

1) Ascendas REIT (SGX: A17U)

Ascendas REIT is Singapore’s first and largest listed business space and industrial real estate investment trust. It was listed on Singapore Exchange in November 2002. As at 31 December 2020, Ascendas Reit’s investment properties under management stood at S$13.7 billion.

The portfolio comprises 200 properties across the developed markets of Singapore, Australia, the United Kingdom and the United States. Ascendas Reit’s portfolio includes business and science parks, suburban office properties, high-specifications industrial properties, light industrial properties, logistics and distribution centres, and integrated developments, amenities and retail properties.

Ascendas REIT’s Portfolio

Key Highlights of 1Q FY2021 Business Update

For 1Q FY2021, Ascendas REIT has conducted 2 acquisitions which are:

• 11 Data Centres across Europe.

• Suburban office in Sydney, Australia.

Meanwhile, the overall portfolio occupancy rate declined by 1.1 percentage points to 90.6% in the latest quarter. This was due to lower occupancy rate from its Singapore and Australia Portfolio, while partially being offset by a higher occupancy rate from its United Kingdom/ Europe Portfolio.

Despite the lower overall occupancy rate, Ascendas REIT has achieved a positive rental reversion of 3%, which is slightly higher when compared with the figure of 2.5% in the previous quarter.

Capital Management

As at 31 March 2021, Ascendas REIT’s aggregate leverage stands at 38.0%, 520 basis points higher as compared to 32.8% a quarter earlier. This was due to the current quarter’s acquisitions of a Suburban Office in Sydney, Australia and 11 Data Centres in Europe across 5 cities in UK & Europe.

Despite the increase in borrowings, the REIT managed to secure a lower all-in debt cost which even helped to improve the REIT’s interest cover ratio. It came in at 4.6 times in the latest quarter, slightly higher than the previous quarter of 4.3 times.

2) Ascendas India Trust (SGX: CY6U)

Ascendas India Trust (“a-iTrust") was listed on Singapore Exchange in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

As at 31 December 2020, a-iTrust’s asset under management stands at S$2.1 billion. a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India.

Ascendas India Trust’s Portfolio

1Q FY2021 Business Update

For 1Q FY2021, a-iTrust's total property income came in at S$47.1 million, which is a decline of 7% year-on-year. The decline was due to an unfavorable exchange rate and lower overall occupancy rate due to COVID-19 pandemic. However, this is partially offset by rental income from its newly completed Endeavour building at ITPB.

On a positive note, the net property income increased by 5% year-on-year due to lower overall property expenses in India Rupee terms. However, the unfavorable exchange rate still resulted in net property income suffering a negligible decline of 1% year-on-year to S$38.4 million.

Capital Management

As at 31 March 2021, a-iTrust's gearing ratio stood at 34%, which is well within the gearing limit of 50%. This means that there is a big headroom of S$933 million which the Trust could use for more accretive acquisitions.

Its interest service coverage ratio is also at a healthy level of 4.1 times. This shows that its EBITDA is more than enough to pay off its interest expenses, which leaves them with minimal risk of default in their interest payment.

3) CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust (“CICT”) is the first and largest real estate investment trust (REIT) listed on Singapore Exchange. It debuted on SGX as CapitaLand Mall Trust in July 2002 and was renamed CICT in November 2020 following the merger with CapitaLand Commercial Trust.

CICT owns and invests in quality income-producing assets primarily used for commercial (including retail and/or office) purpose, located predominantly in Singapore. As the largest proxy for Singapore commercial real estate, CICT’s portfolio comprises 22 properties in Singapore and two in Frankfurt, Germany, with a total property value of S$22.3 billion as at 31 December 2020.

CapitaLand Integrated Commercial Trust’s Portfolio

1Q FY2021 Business Update

For 1Q FY2021, CICT’s gross revenue and net property income surged by 63.9% and 66.6% on a year-on-year basis to S$334.8 million and S$247.1 million respectively.

This was mainly attributable to the effects following the successful merger of CapitaLand Commercial Trust in November 2020. The Integrated Development segment contributed the most towards the growth, while slightly being offset by the retail asset’s performance.

Capital Management

As at 31 March 2021, CICT’s aggregate leverage stood at 40.8%, which is slightly higher than the previous quarter’s figure of 40.6%. However, this is still well within the leverage limit of 50% for S-REITs.

On the other hand, CICT’s average cost of debt came in at just 2.4%, a decline of 0.4 percentage points compared a quarter earlier. This indicates that there is a slight decline in the REIT’s overall interest expenses.

4) CapitaLand China Trust (SGX: AU8U)

CapitaLand China Trust (“CLCT”) is Singapore’s largest China-focused real estate investment trust ("REIT"). CLCT was listed on the Singapore Exchange on 8 December 2006 and established with the objective of investing in a diversified portfolio of income-producing real estate and real estate-related assets in mainland China, Hong Kong and Macau that are used primarily for retail, office and industrial purposes.

Upon completion of the transformational acquisition of five business parks and balance 49% interest in Rock Square, CLCT’s enlarged portfolio will comprise of 13 shopping malls and five business park properties. The diversified portfolio has a total gross floor area (“GFA”) of approximately 1.8 million square metre (“sq m”), located across 11 leading Chinese cities.

CapitaLand China Trust’s Portfolio

1Q FY2021 Business Update

For 1Q FY2021, CLCT’s net property income came in at RMB264.2 million. It is considered a good jump given that it has already constituted to around 80% of the net property income achieved in 2 quarters for 1H2020.

This good set of results can be attributed to the various factors:

• 100% ownership of Rock Square.

• New contribution from CapitaMall Nuohemule.

• Improved Retail segment recovery.

• Reduction in lease restructuring and decrease in arrears cases.

Lastly, CLCT’s Business Parks segment also contributed to the increase in net property income due to the progressive contribution of Business Parks on completion and the strong performance of CLCT’s Business Parks.

Capital Management

As at 31 March 2021, CLCT’s gearing ratio came in at 35.1%, which is 4.7 percentage points higher than the previous quarter. This was mainly due to the acquisition of 5 Business Parks and 49% of Rock Square.

Meanwhile, CLCT’s average cost of debt declined by 0.25 percentage points to 2.51% due to favourable refinancing done in the persistently low interest rate environment.

This allows CLCT’s interest coverage ratio to see a slight improvement to 4.1 times, as compared to a figure of 3.7 times a quarter earlier.

Day 2 of REITs Symposium will be happening this Saturday, 22 May from 9.30am. Register for free now at: https://rebrand.ly/4475d3