Singapore-Listed Real Estate Investment Trusts Active in Portfolio Management
Singapore-listed real estate investment trusts (S-Reits) have been busy with their portfolio management activities in the fourth quarter to date, as managers look to optimize assets and capture growth.
Recent Transactions
As of November 15, S-Reits have announced 10 transactions – comprising five acquisitions and five divestments – for the quarter to date.
Acquisitions and Divestments
On November 15, the manager of CapitaLand Ascendas Reit (Clar) announced the acquisition of 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.
Earlier, on October 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.
Portfolio Reconstitution
CapitaLand Ascott Trust (Clas) has announced one acquisition and two divestments so far this quarter, as part of its portfolio reconstitution strategy to recycle capital into higher-yielding assets. The trust’s manager said on October 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.
Entry into New Segments
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.
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.
Divestments
CapitaLand Integrated Commercial Trust (CICT) said on November 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.
Conclusion
S-Reits have been active in their portfolio management activities in the fourth quarter to date, with a focus on optimizing assets and capturing growth. 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 capitalize on any opportunities that may arise.
Frequently Asked Questions
Q: What is the focus of S-Reits in the fourth quarter to date?
A: S-Reits have been focusing on optimizing assets and capturing growth through portfolio management activities.
Q: What are the recent transactions announced by S-Reits?
A: As of November 15, S-Reits have announced 10 transactions – comprising five acquisitions and five divestments – for the quarter to date.
Q: What is the strategy behind Clar’s divestment of its 21 Jalan Buroh asset?
A: The divestment was part of Clar’s strategy to improve the quality of its portfolio.
Q: What is the significance of interest-rate cuts for S-Reits?
A: Interest-rate cuts can create a more conducive environment for deals to take place, allowing S-Reits to reduce their gearing and capitalize on opportunities.
