Diversified real estate investment trusts (REITs) make up the largest portion of Singapore’s REIT market, with over a quarter of the actively traded counters holding a mixture of assets across multiple sub-sectors.
The 10 S-REITs that adopt a diversified strategy are exposed to different market segments – including industrial, retail, office, and hospitality assets – offering REIT managers greater flexibility to build portfolios that are resilient while having the opportunity for growth.
Such diversification may also be preferred by some investors, who seek broader exposure across different sectors to mitigate against any potential slowdowns in a single sector.
The largest diversified S-REITs in the Singapore market have outperformed in the year-to-date, with the three diversified S-Reits on the $Straits Times Index(STI.SI)$ ranking among the top 10 gainers in the iEdge S-REIT index for the year-to-March 13.
1. $CapLand IntCom T(C38U.SI)$
CapitaLand Integrated Commercial Trust (CICT) is the largest S-REIT in Singapore, and it holds a diversified exposure including office and retail assets. For the year-to-March 13, the shares have climbed 9.3% ranking it third in the iEdge S-REIT index.
CICT’s net property income (NPI) grew by 3.4% on year to S$1.2 billion in FY24. Distribution per unit (DPU) also increased 1.2% to S$0.1088 in FY24. This performance was driven by higher gross rental income and lower operating expenses, despite the absence of rental income from Gallileo undergoing asset enhancement initiatives (AEI) and the divestment of 21 Collyer Quay.
As at 31 December 2024, all three of CICT’s business segments – retail, office and integrated development – saw sequential improvements in committed occupancy rates from the previous quarter.
CICT continues to monitor the market for portfolio reconstitution opportunities, but said it would maintain a disciplined approach and be predominantly Singapore focused. The manager will also regularly review AEI opportunities based on asset attributes and growth potential.
2. $Mapletree PanAsia Com Tr(N2IU.SI)$ & $Frasers L&C Tr(BUOU.SI)$
Other STI REITs that hold a diversified exposure include Mapletree Pan Asia Commercial Trust (MPACT) and Frasers Logistics & Commercial Trust, which have climbed 2.5% and 2.3% respectively for the year to March 13.
MPACT’s manager noted in its Q3 FY25 results that stable Singapore performance had moderated the impact of overseas headwinds. The REIT posted S$223.7 million in revenue in 3QFY25, down 7.4% year on year amid lower overseas contributions which were further dampened by the persistently strong Singapore dollar.
However, the portfolio’s Singapore assets showed resilience with combined gross revenue (excluding Mapletree Anson) up 0.2% on year, driven by VivoCity’s robust performance despite ongoing AEIs.
3. $OUEREIT(TS0U.SI)$
Outside the STI, other diversified S-REITs include $Suntec Reit(T82U.SI)$ , OUE REIT, $Lendlease Reit(JYEU.SI)$ , $CapLand China T(AU8U.SI)$ , $CapLand India T(CY6U.SI)$ , $IREIT Global EUR(8U7U.SI)$ , and $Stoneweg Reit EUR(CWBU.SI)$ .
OUE REIT posted revenue of S$295.5 million in FY24, up 3.7% on year amid stable operational performance of the Singapore office portfolio and strong performance of hospitality assets.
Amount available for distribution in 2HFY24 grew by 8.0% on year, to S$62.4 million despite higher finance costs. The distributable amount also included the release of the remaining S$2.5 million capital distribution from the partial divestment of OUE Bayfront.
The REIT’s office assets saw committed occupancy remain healthy at 94.6% as at 31 December 2024, with positive rental reversion of 10.7% for FY2024. Its hospitality segment revenue surged 8.9%on year to S$105.9 million, driven by the robust concert and MICE pipeline in the first half of 2024, as well as continued improvement in visitor arrivals throughout the year.
OUE REIT will continue to monitor portfolio reconstitution opportunities to unlock value amidst improved capital market sentiment. OUE REIT aims to increase revenue contributions from the hospitality segment to 40%, from under 35% currently, while reviewing opportunities in key gateway cities such as Melbourne, Australia and Hong Kong.
As of March 13, the 10 diversified S-REITs maintained an average distribution yield of 7.6%, ranking the subsector ahead of the broader S-Reit market. Their average price-to-book ratio also stood at 0.7, slightly below the S-REIT average of 0.8.
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