OREANDA-NEWS. Singapore Exchange (SGX) lists 32 Real Estate Investment Trusts (REITs) and six stapled trusts. Three REITs – Manulife US REIT, Frasers Logistics & Industrial Trust and EC World REIT – were listed recently on SGX, on 20 May, 21 June and 28 July respectively. The Global Industry Classification Standard (GICS®) classifies nine of these 32 trusts as Retail REITs.

According to GICS®, Retail REITs comprise companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of shopping malls, outlet malls, neighbourhood and community shopping centres. 

The nine Retail REITs – – have a combined market capitalisation of over S$23 billion. In the 2016 year-to-date, they have averaged a dividend-inclusive total return of 17.7%, bringing their one-year and three-year total returns to 11.2% and 28.8%. The five trusts also maintain an average dividend yield of 6.2%.

The newest addition to the group of Retail REITs – BHG Retail REIT – was listed on SGX on 11 December 2015. It is the first pure-play China retail REIT sponsored by China retail property operator Beijing Hualian Department Store Co Ltd. The principal investment strategy of BHG Retail REIT is to invest, directly or indirectly, in a diversified portfolio of income-producing real estate that is used primarily for retail purposes (whether either wholly or partially), as well as real estate-related assets, with an initial focus on China. Its portfolio comprises five retail properties – Beijing Wanliu (60%), Hefei Mengchenglu, Chengdu Konggang, Dalian Jinsanjiao and Xining Huayuan – located in Tier 1, Tier 2 and other cities of significant economic potential in China.

Over the last two weeks, eight Retail REITs have reported their earnings for the three months ended 30 June 2016. For the quarter, theseeight Retail REITs averaged a 2.6% gain in distribution per unit (DPU) from the year-ago period.  Lippo Malls Indonesia Trust registered the highest YoY increase of 16.4% in DPU to 0.85 Singapore cents, while CapitaLand Retail China Trust generated a 4.4% YoY decline in DPU to 2.61 Singapore cents. 

These eight trusts averaged a 2.9% increase in net property income, while gross revenue rose an average 3.1%. 

On average, the eight REITs had an aggregate leverage ratio of 31.8% as of the quarter ended 30 June. This compares with an average of 31.9% in the three months ended March 31. Interest cover for the five trusts averaged 5.4 times in the June quarter, compared with an average of 5.5 times in the March quarter.

Note that Fortune REIT, which has a primary listing on the Hong Kong Stock Exchange, reports its financial results on a half-yearly basis, while SPH REIT’s financial quarters under consideration are the three months ended 31 May 2016 and three months ended 29 February 2016.

Among the trusts, Lippo Malls Indonesia Retail Trust had the highest aggregate leverage ratio in the June quarter at 35.7%, while SPH REIT had the lowest aggregate leverage ratio of 25.7%.