Bookmark & Share
Singapore REITS have splashed US$16.9 billion to acquire assets in 2019.
Singapore’s real estate investment trusts (REITs) are enjoying a bumper year in deal-making and fundraising, with the mantra bigger is better driving capital market activity within the sector.
In fact, Singapore-listed REITs spent US$16.9 billion (S$23.1 billion) for acquisition of assets this year, which is triple the previous peak registered in 2014, reported Bloomberg.
The sector also managed to raise a record amount in follow-on share sales, riding an 18% increase in the FTSE Singapore REIT Index, or four times the hike in the broad benchmark within the city-state.
The mergers and acquisitions resulted to some of the region’s largest REITs. The appeal of being big – the entity would find it easier to tackle competition, raise funds for expansion and secure a spot in global benchmarks and portfolios. With these, stock buyers consider expanded companies as better investments.
“REITs are going to be a go-to sector for the next year as consolidation will add another reason to buy alongside yields,” said United First Partners’ Singapore-based director Jin Rui Oh.
Specialising in trading special situations resulting from mergers and acquisitions, Oh expects Singapore REITs to deliver 12% to 15% returns in the next year and the deals to continue.
CapitaLand’s S$6 billion acquisition of two real estate units from Temasek Holdings emerged as this year’s largest deal.
OUE Commercial REIT and OUE Hospitality Trust agreed to create one of the 10 biggest REITs in Singapore in April, while Ascott Residence Trust and Ascendas Hospitality Trust created Asia-Pacific’s biggest hospitality trust with S$7.6 billion of assets.
People familiar with the matter revealed that Frasers Logistics & Industrial Trust and Frasers Commercial Trust also plan to consolidate.
CLSA and United First analysts expect to see more deals in the coming year, particularly among industrial and commercial REITs.
“M&As will extend the rally and solidify Singapore’s position as a REIT hub in Asia,” said Oh.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
Related Articles: