Singapore REITs Monthly – Positioning for the future December 17, 2021 1243

  • Stock markets declined MoM, as stocks fought to shake off the Omicron jitters. The FTSE S-REIT Index continued to lag the STI and FTSE Real Estate developer index, down 3.0ppts MoM. All sub-sectors were in the red, except for Healthcare (+3.5ppt), with Hospitality (-6.6ppts) weighing down the index.
  • The dividend yield spread of 262bps is -1.1SD of the 10-year average. The 3MSOR was up 20bps YoY, but remains below the 5- and 10-year historical levels, supporting c.S$11.5bn in acquisition YTD.
  • We remain OVERWEIGHT with preference on the Retail and Industrial sectors. Catalysts expected from pick-up in the economy and portfolio rebalancing. SREITS under our coverage to deliver FY21e DPU yields of 4.0-8.7%. Top picks are PRIME US REIT (Prime SP, ACCUMULATE, TP US$0.94) and Ascendas REIT (AREIT SP, BUY, TP S$3.65).



Two new SREITs made their debut on the Singapore Exchange, bringing the number of SREITs to 41. Daiwa House Logistics Trust (DHLT SP, not rated) was listed on 26 November 2021 with an AUM of S$953mn. It comprises 14 logistic assets located in Japan. Data centre REIT, Digital Core REIT (DCREIT SP, not rated), made its debut on 6 December 2021 with a portfolio of 10 data centres located in North America valued at US$1.4bn.


SREITS pressed on with portfolio rebalancing. c.S$2.9bn in acquisitions were announced since November 21, bringing the YTD value of acquisitions to c.S$11.5bn. Notable acquisitions include Mapletree Logistics Trust’s (MLT SP, not rated) S$1.4bn acquisition of 17 logistics assets in China, Vietnam and Japan, Manulife US REIT’s (MUST SP, Accumulate, TP: US$0.84) three office assets in Phoenix and Portland, USA, and CapitaLand Integrated Commercial Trust’s (CICT SP, Accumulate, TP: S$2.54) maiden entry into Australia through the acquisition of two Grade A office buildings in Sydney valued at A$720mn. The latter comes hot on the heels of Keppel REIT’s (KREIT SP, not rated) A$328mn acquisition of a Grade A office under development located in North Sydney.



The Oct 21 retail sales index (excluding motor vehicles) was its tightest at -1.6% compared with the respective month in 2019, partly attributed to the Computer & Telecommunications Equipment sector (+73.4% YoY), which recorded higher mobile phone sales due to new product launches. Eight out of 12 of the retail categories experienced YoY growth, with Watches & Jewellery and petrol service stations delivering significant YoY growth of 30.1% and 17.6% respectively.

The F&B services index dipped 5.1% YoY due to the two pax dine-in restrictions in Oct 21. However, the raising of group size from two to five pax for dine-in and gatherings, which came into effect on 22 November 2021, should help catalyse F&B spending during the festive year-end period.


Nov 21 international visitor arrivals grew 72% MoM from 24k to 41k, the highest since the pandemic hit (Figure 12). This was largely attributed to the nine countries that were added to the vaccinated travel lane (VTL) on 19 October and 15 November. However, this represents a mere 2.7% of Nov 19’s arrivals. Outbound resident departures by air surpassed international arrivals for Oct 21, up 9.6% MoM to 45k. This represents 6.4% of Oct 19’s outbound residents travelling by air. This could be the start of waning staycation demand as Singaporeans revisit travel plans.


Average RevPAR was 24.7% higher YoY, on the back of higher room rates and occupancy.  The rerating followed the commencement of the VTL on 8 September 2021, which began with Germany and Brunei. On a MoM basis, average RevPAR marginally improved – a 14.2% improvement in room rates erased a marginal 0.4ppt decline in occupancy.


Singapore and the nine respective countries continued with the VTL despite the emergence of the Omicron variant in November. We think this reiterates the government’s stance on the virus becoming endemic and confidence in protocols in place to detect and contain the infections. Hospitality recovery remains fragile, threatened by the new mutation of the virus and additional pre- and post-travel testing and isolation requirements.

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