Singapore Reits resume overseas expansion after $464b blow

Singapore has established itself as a hub for real estate investment trusts (Reits) over the past two decades. Now, following the initial blow from the Covid-19 outbreak, its Reits are slowly coming back to the market with a mission: resume their global expansion.

Mr Gordon Tang and his wife Celine, who have one of the biggest Reit stakes in Singapore, are among those leading the charge. Suntec Real Estate Investment Trust, of which they own about one-tenth, completed the acquisition of a 50 per cent holding in a London property last month, finalising a £430.6 million (S$760 million) deal that had been put on hold with the pandemic.

Lippo Malls Indonesia Retail Trust and IReit Global, in which Chinese tycoon Tong Jinquan owns stakes of more than 4.8 per cent, are raising money to fund acquisitions in Indonesia and Spain.

Keppel Reit and Ascendas Reit both bought office properties in Australia in September.

Like many other industries, Reits have been hit hard during the pandemic. More than US$340 billion (S$464 billion) of value has been wiped out this year from an index tracking them globally as employees emptied out offices in major cities and shoppers turned to e-commerce.

For trusts in Singapore, which houses the most Reits in Asia excluding Japan, transactions are slowly picking up, boosted in part by lower financing costs.

Most of the $3 billion in deals announced since January happened in the third quarter, DBS Group Holdings said in a note on Sept 29.

It added that the market should keep improving through the rest of the year and start of next year, and DBS analyst Derek Tan expects more acquisitions as the coronavirus crisis dissipates over time.

"Pandemic-related distress sales mean some good opportunities for Asian money accessing the overseas market," said Bloomberg Intelligence senior analyst Patrick Wong. "More transactions are expected to come in."

Mapletree Logistics Trust is among those that have recently restarted their overseas push. It is spending $1.09 billion for real estate in China, Malaysia and Vietnam.

Frasers Logistics & Commercial Trust, controlled by Thailand's richest person Charoen Sirivadhanabhakdi, said in August that it will acquire properties in Australia and Britain for about $90 million.

His fortune had dropped more than US$9 billion this year to US$10.4 billion, according to the Bloomberg Billionaires Index.

The Tangs' wealth has also suffered, with the combined value of their holdings in three Reits currently traded down US$234 million for this year to US$519 million, according to Bloomberg data.

The Tangs also control SingHaiyi Group, a developer that has expanded to the United States and Australia, and have holdings in OUE Commercial Reit, which owns properties across Singapore and Shanghai, and Cromwell European Reit.

Eagle Hospitality Trust, another of their investments, has been suspended since March as its manager defaulted on a US$341 million loan.

Frasers Logistics declined to comment.

"Notwithstanding Covid-19, we believe that London will continue to be a key global market where good-quality assets are well sought after," said Mr Chong Kee Hiong, chief executive of ARA Trust Management (Suntec), the manager of Suntec Reit, when referring to the recent purchase of London's Nova development.

"Yield-accretive, well-located, high-quality assets in key cities were our acquisition criteria."

Since the first Singapore listing of a trust in 2002, the market has grown exponentially. The Republic has 44 Reits and property trusts with a combined market value of $101 billion, according to a Singapore Exchange report last month.

Last year, almost 45 per cent of the world's Reit initial public offerings debuted here, surpassing places such as the US, Australia and Japan, the bourse said.

Due to the scarcity of land in the island, the trusts have long turned to overseas for growth. More than 80 per cent of Singapore's Reits and property trusts have invested in assets abroad, the exchange's report showed. Australia is a key market, with the number of transactions to the country climbing 72 per cent in the first half of the year even as their amounts remained low, according to real estate consulting firm Knight Frank.

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A version of this article appeared in the print edition of The Straits Times on November 03, 2020, with the headline 'Singapore Reits resume overseas expansion after $464b blow'. Print Edition | Subscribe