OREANDA-NEWS. October 22, 2015. Real Estate Investment Trusts (REITs) raise capital to purchase primarily real estate assets, usually with a view to generating income for unitholders of the fund. It allows individual investors to access real property assets and share the benefits and risks of owning a portfolio of properties, which typically distribute income at regular intervals.

The Singapore Exchange lists 28 Real Estate Investment Trusts (REITs) and six stapled trusts. Seven of these are classified as Industrial REITs according to the Global Industry Classification Standards (GICS®).

The four Industrial REITs that reported quarterly earnings over the past week have a combined market capitalisation of S\\$4.84 billion. In the year thus far, they averaged a price decline of 4.1%, with dividends boosting total returns to 0.8%.

The four trusts also maintain an average annualised distribution yield of 7.8%. This compares with the benchmark Straits Times Index’s (STI) dividend yield of 4% and the Singapore Fixed Income (SFI) Index yield of around 2.9%.

For the quarter ended September 30, 2015, the four trusts averaged a distribution per unit (DPU) of 1.73 Singapore cents.  Three trusts – Soilbuild Business Space REIT, Sabana Shariah Compliant Industrial REIT, Mapletree Logistics Trust – averaged a 0.6% year-over-year increase in DPU. YoY data is unavailable for Keppel DC REIT, which listed on 12 December 2014.

Although Mapletree Logistics Trust and Sabana Shariah Compliant Industrial REIT posted a 1.1% and 2.2% YoY decline in DPUs, they had the highest and second-highest DPUs of 1.86 cents and 1.77 cents respectively. Soilbuild Business Space REIT posted the highest YoY increase in DPU – a rise of 5.1% to 1.63 cents.

For the quarter, these trusts averaged net property income of S\\$32.6 billion and gross revenue of S\\$39.9 billion. Soilbuild registered the highest YoY increases of 25% and 22% in net property income and gross revenue respectively.

On average, the four REITs had an aggregate leverage ratio of 35.8% as of 30 September, up from an average of 33.8% in the three months ended 30 June.

Among the four trusts, those with the highest leverage ratios in the September quarter were Mapletree Logistics and Sabana Shariah Compliant REIT at 38.8% and 38% respectively. Keppel DC had the lowest aggregate leverage ratio at 30.1%. Mapletree Logistics and Keppel DC posted the highest increases in aggregate leverage ratios in the September quarter versus the previous period, with a rise of 4.4 and 3.7 percentage points respectively.

Meanwhile, the industry outlook remains weak. Mapletree Logistics noted that the global economic outlook has softened in recent months, as a deepening slowdown in China and rising uncertainties in other emerging markets outweighed signs of improvement in the US. Given the subdued business environment, Mapletree’s customers continue to be cautious, it said in its quarterly results release.

Singapore’s industrial property market continues to face a challenging operating environment, with the supply of industrial space set to outstrip demand over the next 12-18 months, Soilbuild said in its quarterly results statement. Industrial companies are expected to remain cost-sensitive given the weak macroeconomic outlook, it added.

Rental rates for Singapore’s industrial properties will remain under pressure due to falling demand and increasing supply, though higher-specification properties are expected to be less affected as demand remains stable in the September quarter, according to credit rating agency Fitch.

However, one bright spot is demand for data centres, despite a volatile operating environment, Keppel DC said in its quarterly results statement. The rise of social media, Internet penetration, as well as compliance and regulatory requirements, are expected to fuel the growth of data storage needs, it added.

Financial results for the quarter ended Sept. 30, 2015

Name Distribution per unit (Singapore cents) YoY % change Net Property Income  (S\\$ mln) YoY % change Gross Revenue (S\\$ mln) YoY % change
Mapletree Logistics Trust 1.86 -1.1 72,955 6.3 87,462 7.3
Keppel DC REIT* 1.64 N/A 21,373 N/A 25,743 N/A
Soilbuild Business Space REIT 1.63 5.1 17,777 25.3 20,701 22.4
Sabana Shariah Compliant Industrial REIT 1.77 -2.2 18,294 1.4 25,494 1.5
Average 1.73   32,600   39,850  

*Listed on 12 December, 2014

Source: Company data

Debt profiles

Source: Company data

*Based on closing prices as at 30 September, 2015

#Based on closing price as at 14 October, 2015

~Listed on 12 December, 2014

Source: Company data and SGX StockFacts (data as of 19 October 2015)

Mapletree Logistics Trust

Mapletree Logistics Trust, together with its subsidiaries, operates as a logistics real estate investment trust primarily in Singapore. It invests in a portfolio of logistics real estate and real-estate-related assets. The company’s properties include oil and chemical logistics, free trade and non-free trade zone third party logistics, food and cold storage, distribution centre, and industrial warehousing. As of September 30, 2015, its portfolio consists of 119 properties across 8 geographic markets, with a total asset value of S\\$5.0 billion.

For the quarter ended 30 September 2015 financial results, please click here.

Soilbuild Business Trust

Soilbuild Business Space REIT engages in the investment of various real estate properties for business space purposes, as well as real estate-related assets in Singapore. Its property portfolio comprises 10 business space properties - two business park properties and eight industrial properties, with a total asset value of S\\$1.2 billion. Soilbuild REIT is managed by SB REIT Management and is a wholly owned subsidiary of Soilbuild Group Holdings.

For the quarter ended 30 September 2015 financial results, please click here.

Sabana Shariah Compliant Industrial REIT

Sabana Shariah Compliant Industrial REIT is a Shariah compliant equity real estate investment trust launched and managed by Sabana Real Estate Investment Management Pte Ltd. The fund invests in the real estate markets of Asia. It seeks to invest in income-producing real estate properties operating in the industrial sector. Sabana REIT's portfolio comprises 23 industrial properties across Singapore, and is divided into four main categories, namely high-tech industrial, chemical warehouse & logistics, warehouse & logistics, and general industrial.

For the quarter ended 30 September 2015 financial results, please click here.

Keppel DC REIT

Keppel DC REIT is a real estate investment trust launched and managed by Keppel DC REIT Management Pte. Ltd. It invests in the real estate markets across Asia-Pacific and Europe. The fund invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets, with an initial focus on Asia Pacific and Europe. Its portfolio consists of 9 data centres across Australia, Ireland, Malaysia, Singapore, The Netherlands and United Kingdom, with a total asset value of S\\$1.1 billion.

For the quarter ended 30 September 2015 financial results, please click here.