SINGAPORE-LISTED real estate investment trusts (S-Reits) have been active in their portfolio management activities in the fourth quarter to date, as managers look to optimise assets and capture growth.
As at Friday (Nov 15), S-Reits have announced 10 transactions – comprising five acquisitions and five divestments – for the quarter to date.
On Friday, the manager of CapitaLand Ascendas Reit (Clar) said it had acquired a parcel of land in the US, which will be developed into a new logistics property called Summerville Logistics Center.
The total investment is estimated at around S$94.8 million, and is part of the Reit’s strategy to expand its logistics portfolio to capture growth potential in this sector. The manager added that it will continue to identify opportunities to scale in the US, riding on onshoring and reshoring trends.
Earlier, on Oct 11, Clar’s manager announced the divestment of its 21 Jalan Buroh asset for S$112.8 million, representing a premium to valuation. This was in line with the manager’s strategy to improve the quality of Clar’s portfolio.
Meanwhile, CapitaLand Ascott Trust (Clas) announced one acquisition and two divestments so far this quarter, as part of its portfolio reconstitution strategy to recycle capital into higher-yielding assets.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The trust’s manager said on Oct 1 that it was acquiring lyf Funan Singapore at an agreed property value of S$263 million. It also announced separately in October that it will divest Citadines Karasuma-Gojo Kyoto in Japan and Somerset Olympic Tower Tianjin in China.
Prior to divesting Somerset Olympic Tower Tianjin, Clas had divested nearly S$400 million in assets this year. Apart from acquisitions, the trust has also been carrying out asset-enhancement initiatives, completing such works for five of its properties in the year to date.
Several S-Reits have also announced acquisitions that marked their entry into new segments.
The manager of Parkway Life Reit said last month that the trust will acquire 11 nursing homes in France for 111.2 million euros (S$159.9 million), in line with an expansion of its investment mandate.
The manager noted that the expanded mandate provides the opportunity to tap a larger pool of investment opportunities for driving long-term growth. It also aligns with its strategy of building a third key market outside Singapore and Japan.
Similarly, Frasers Logistics & Commercial Trust (FLCT) announced in October that it was acquiring 2 Tuas South Link 1, located near the Tuas Mega Port, for S$140.3 million. This marks FLCT’s entry into Singapore’s logistics and industrial market, and is part of plans to grow the trust’s logistics and industrial portfolio.
Elsewhere, CapitaLand Integrated Commercial Trust (CICT) said on Nov 12 that it had divested its Grade-A office building at 21 Collyer Quay in Singapore for S$688 million.
The proceeds grant CICT greater flexibility to repay debt and finance capital expenditures, asset-enhancement works, investments, and general corporate and working-capital requirements.
With interest-rate cuts under way, S-Reits may be able to tap a more conducive environment for deals to take place. Divesting mature assets can help S-Reits reduce their gearing, providing higher debt headroom to capitalise on any opportunities that may arise.
Knight Frank noted last month that property investment activity showed some nascent signs of a pickup in September, amid the US Federal Reserve’s interest-rate cut.
The property consultancy added that the first of the rate cuts will be the stimulus for deals that were simmering to the surface, and are likely to be positive for properties currently in due diligence.
Some of the largest transactions by S-Reits in 2024 include CICT’s acquisition of a 50 per cent interest in Ion Orchard for S$1.8 billion, Mapletree Pan Asia Commercial Trust’s divestment of Mapletree Anson for S$775 million, and Frasers Centrepoint Trust’s acquisition of an additional 24.5 per cent interest in shopping mall Nex for S$523.1 million. SGX RESEARCH
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.
