Industry analysts and players anticipate Singapore-listed real estate investment trusts (S-REITs) to increase their portfolios through purchases this year, on the back of a low interest rate environment.
They believe more diversification could be on the cards of the REITs whose portfolios already extend across several countries, as they acquire overseas assets.
Despite the low interest rate environment, Moody’s still anticipates S-REITs to utilise their “well-capitalised balance sheets” to continue acquisitive growth strategies this year.
“Rated S-REITs should benefit from continued growth in rental rates and high occupancies as the region’s economies continue to enjoy robust growth,” reported Alvin Tan and Philipp Lotter, Analysts from Moody’s.
“Ample liquidity in the market and backing from strong sponsors for most rated S-REITs should also alleviate most risk in refinancing. As a result, we maintain our stable outlook on the sector.”
Moody’s has revised its view on the S-REIT segment from “negative” in June 2010 to “stable,” due to the robust recovery of Singapore’s economy, the stabilisation of rents across the retail, office and industrial real estate sub-sectors and the S-REITs’ stable performance and lower refinancing threats.
Meanwhile, REIT managers revealed that they are looking to expand locally as well as overseas.
“REIT managers are constantly looking for opportunities to grow through value-added investment opportunities to deliver sustainable returns for unit holders,” according to a spokesman from Ascendas REIT (A-REIT).
In February 2011, A-REIT ventured into the region with the forward acquisition of a business park in China, which marked its first asset purchase outside Singapore. The trust said it will concentrate on major tier one cities such as Shanghai as it takes its first steps overseas.
“We see the expansion of Ascendas REIT into China as a complement to its growth strategy in Singapore,” noted the A-REIT spokesman.
Ascott Residence Trust (Ascott REIT), another Singapore-listed trust, has a portfolio of rental housing and serviced residence properties situated in 23 cities across 12 countries in Europe and the Asia Pacific region. However, the REIT is still looking for new markets to conquer.
Chong Kee Hiong, Chief Executive of Ascott REIT’s manager, said, “In hospitality, scale and an international network are critical, as our customers from multinational corporations (MNCs) want to work with accommodation providers with many properties in many cities, who can meet their global needs.”
“By being present in more geographical locations that meet the needs of these customers, we are well-placed to bring higher returns to unit holders.”
Mapletree Logistics Trust is also expanding further overseas. The trust recently made its third acquisition in South Korea, a market which Chief Executive Richard Lai described as a “key entrant market.”
“Entrenching ourselves in South Korea will help pave the way for strategic relationships with Korean logistics players and allow MapletreeLog to leverage on this sector’s growth,” said Mr. Lai.
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