Tag Archives: REAL Estate Investment Trusts

Industrial REITs outperform despite market volatility

Posted on 7 Jun 2012 | Comments Off on Industrial REITs outperform despite market volatility

Real estate investment trusts (REITs) have outperformed the market despite the volatility in the first half of the year.

They are also known for their relative resilience amid economic downturns.

And industrial REITs appear to hold up better than the rest with total returns of 18 per cent in the first quarter.

REITs have outperformed other assets like equities since the start of the year.

The benchmark REIT Index rose 5.2 per cent on-year to date, compared to the key STI index’s 2.7 per cent increase.

Among the best performers were office REITs which made a strong comeback after being sold down late last year over concerns of oversupply.

But analysts say industrial REITs offer better earnings visibility going forward.

Tey June Teng, investment analyst at SIAS Research, said: “According to URA data, we still see some growth in the prices and rentals of industrial space in the first quarter. Generally, all the industrial REITs on average have two to three years weighted average lease expiry profile. We expect that their earnings will be quite stable in the next one to two years.”

Beside price gains, industrial REITs are attractive because of the relatively high dividend yields.

That adds to the total return of an industrial REIT to a handsome 18 per cent in the first quarter of the year.

Despite the global downturn, REIT managers such as Sabana appear to be in a good position to expand their portfolio.

Sabana Real Estate Investment Management’s CEO, Kevin Xayaraj, said: “We have about S$100 million of debt headroom to fund our new acquisitions this year. We will be selectively buying this year in Singapore, and if we were to succeed, then I think the impact of these potential new acquisitions will come in this year or next year.”

But investors should beware that not all REITs are equal.

Ti Wee Pang, analyst at DMG & Partners Research, warned: “Overseas REITs will have a higher risk because they will expose investors to currency fluctuations. When investors invest in these REITs, they will also have to analyse carefully what industries they are involved in and the political stability in those countries.”

Industrial REITs with a predominantly Singapore-focused portfolio include AIMS AMP Capital Industrial, Sabana, Cache Logistics and Cambridge Industrial Trust.

Source : CNA – 2012 Jun 6

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CapitaMalls Asia to grow portfolio

Posted on 23 May 2011 | Comments Off on CapitaMalls Asia to grow portfolio

CapitaMalls Asia (CMA) is planning to acquire at least seven more malls by the end of the year, to grow its S$24.1-billion global portfolio to 100 properties. This is in line with plans to acquire another S$2 billion worth of new projects this year.

All eyes are on the growth of the Chinese market, which makes up the lion’s share of the portfolio in terms of gross floor area (GFA) at 70 per cent, ahead of Singapore at 20 per cent, Malaysia, India and Japan.

CMA wants to enhance its early mover advantage in China, and has set out a longer term vision to double the number of malls there within three to five years.

That could help the Chinese market catch up with Singapore’s lead in terms of asset value, where Singapore contributes 55 per cent of the portfolio.

“We started to grow a lot of our shopping malls, maybe a bit too early in 2004, 2005, but we are seeing the results coming through… In the next two, three years, China will have a bigger base and from there we can launch to grow even further,” said Mr Lim Beng Chee, CEO of CMA.

To accelerate that growth, CMA will be rolling out its 3rd Generation (3G) malls concept this year, where standardised building designs will be used to cut down costs and reduce construction time from three to two years.

“The concept involves a common tenant mix and layout, which will also make it easier to negotiate the lease of multiple locations at one go,” said Mr Chan Kong Leong, CMA’s general manager for West China.

Another key change is a smaller proportion of space given to anchor tenants. They will now be allocated only about 30 per cent of the net lettable area, down from at least half previously.

This creates a higher upside for yields and helps the mall become more profitable faster. But CMA adds that there will be exceptions to its cookie cutter approach and some malls could still have special designs if they have good locations.

CMA is also banking on a strategy of focusing on the mass market segment because of the flexibility and economies of scale it creates.

Euromonitor market research firm estimates that there are currently about 1,200 malls in China – with up to 150 malls built each year for the past eight years.

In response to this high demand, Chengdu’s CapitaMall Jinniu is being expanded to a gross floor area of more than 2 million sq ft or more than twice the size of VivoCity.

CMA added that it is also now more positive about the prospects of third- and fourth-tier cities than it was a few years ago, and is considering opening more malls in cities it already is in.

Source : Today – 23 May 2011

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