IN THIS year’s Singapore Governance and Transparency Index (SGTI) 2024 rankings, the overall scores for Singapore real estate investment trusts (S-Reits) and business trusts declined to 86.6 points from 89.3 last year.
Nearly two-thirds of the 38 S-Reits with rankings decreased year-on-year in overall scores. This year’s assessment had mean penalty points for poor disclosure practices, such as earnings restatements, drop by three points to 1.8 points – the lowest since the SGTI 2020 rankings.
For the general category, the overall score of 69.3 points was lower than 74.8 last year. The decline in SGTI scores this year was largely due to a revision in the current assessment round, which includes more indicators assessing sustainability reporting such as materiality and sustainability governance. The ESG and Stakeholders pillar had its weightage double to 20 per cent.
Findings by the SGTI highlighted that S-Reits recorded strongest performance in shareholder rights; accountability and audit; and disclosure and transparency. S-Reits also commonly identified climate change as a material issue.
In the Reits and Business Trusts category, CapitaLand Ascott Trust (Clas) and CapitaLand Ascendas Reit (Clar) maintained their first and third positions respectively. Clas retained its top position for the fourth consecutive year at 104 points, while Clar remained at third place for the second year at 102 points. CDL Hospitality Trusts (CDLHT) was in second place at 102.8 points, climbing 22 places with a year-on-year (yoy) improvement of 16.6 points.
In its H1 2024 results, CDLHT recorded 5.9 per cent yoy improvement in net property income and maintained distribution per stapled security at S$0.0251. CDLHT recorded positive yoy revenue per available room across all its markets, except for New Zealand.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The five S-Reits with the greatest yoy improvement in overall scores: Frasers Centrepoint Trust (+21.9 points), Elite UK Reit (+16.7 points), CDLHT (+16.6 points), Keppel Reit (+10.4 points) and Prime US Reit (+9.8 points).
FCT jumped 32 spots, finishing sixth at 100.3 points. In its 2023 annual report, it started disclosing measurable objectives for implementing its board diversity policy. It also reported that board independence increased to 62.5 per cent in 2023 from 50 per cent in 2022.
In green initiatives, FCT – together with Frasers Property and the SP Group – will roll out Singapore’s largest solarisation installation for six of its retail malls by end 2024. This initiative targets to generate about S$179,000 in energy savings and a reduction in about 293 tonnes of carbon emissions yearly.
Cromwell European Reit (Cromwell E-Reit), tied with FCT at sixth place, moved up a rank this year and recorded the highest base score in trusts category.
In its H1 2024 results, Cromwell E-Reit reported that 82 per cent of its office assets are now BREEAM or LEED certified, up from 65 per cent half a year ago, and above its 40 per cent criteria for its sustainability-linked loans.
The writer is a research analyst at SGX
For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook
