Bookmark & Share
This comes as the industrial property market has seen an increase in occupancy rates and rental index.
Singapore’s industrial property market registered a 0.3 percentage point year-on-year increase in occupancy rates and rental index – reinforcing the positive results of industrial REITs in the first quarter of 2019, said CGS-CIMB analyst Lock Mun Yee.
She believed that the results of industrial REITs in the second quarter could be driven inorganically year-on-year such as Mapletree Industrial Trust’s commencement of 18 Tai Seng, but cautioned that operational metrics may remain flattish, reported Singapore Business Review.
“The bifurcation of demand between higher and lower specification assets could continue, especially for logistics assets, due to automation and e-commerce requirements,” she said.
And while the trade war has not significantly impacted industrial REITs, corporates seem to have become increasingly cautious with tenancy decisions.
“We think long drawn tensions could potentially negatively impact the whole industry. Whilst Hyflux and CWT headlined tenant default risk in Q2, they continue to be current with rents,” she noted.
ESR-REIT, for instance, filed proofs of claim against Hyflux on 6 March. Its 8 Tuas South Lane property is fully leased to the water treatment firm for 15 years.
HNA’s CWT International, CWT Limited’s parent company, failed to pay interest, setting off a cross-default to lenders covered by a HK$1.4 billion (S$243 million) facility agreement.
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:
Industrial Reits to see healthy results this year