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Mixed results for S-REITs in Q4 2015: report

PropertyGuru

Singapores large cap industrial REITs witnessed the "most positive surprises" in Q4 2015 DPU, with Ascendas Real Estate Investment Trust (AREIT) and Mapletree Industrial Trust (MINT) results coming in two to three percent ahead of expectations, revealed a Credit Suisse report.

Notably, MINT registered rent reversions of between +1.3 to +6.5 percent while AREIT's reversions remained strong at +8.4 percent.

Occupancies also remained stable for large cap REITs such as AREIT and Mapletree Logistics Trust (MLT) at 88.9 percent and 96.9 percent, respectively. MINT occupancies improved 0.9 percentage points quarter-on-quarter with improvements across the board for all asset classes.

With this, Credit Suisse raised market DPU estimates by 0.7 to 0.9 percent.

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On the other hand, the biggest disappointments were seen in the hospitality sector as RevPARs fell 2.9 to 9.4 percent quarter-on-quarter, leading to 1.4 to 2.8 percent downgrades in DPU estimates.

Credit Suisse noted that CDLHT and FHT recorded the biggest quarter-on-quarter declines of 5.0 to 9.4 percent as both were impacted by refurbishments.

Meanwhile, results for retail and office REIT sectors were mostly in line.

Suburban mall reversions were resilient, mostly at ~5-7 percent, while centrally located/orchard road malls came in at~ 0-3 percent. Tenant sales continued to grow (particularly for Suburban REITs) contrary to declining island-wide retail sales, it said.

Office reversions, on the other hand, slowed significantly, ending the year at single-digit levels for Keppel REIT (KREIT) and CapitaLand Commercial Trust (CCT) from 15-20+ percent at the start of the year.

Looking ahead, Credit Suisse expect the suburban retail sector to remain as the most resilient, giving outperform ratings on Mapletree Commercial Trust (MCT), CapitaMall Trust (CMT), and Frasers Centrepoint Trust (FCT) which offer yields of 5.7 to 6.2 percent.

Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories emailnikki@propertyguru.com.sg

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