Diversified Real Estate Investment Trusts (REITs) represent the largest segment of Singapore's Reit market, with more than a quarter of active trading counters holding a mix of assets across various sub-sectors.
Ten Singapore-listed Reits (S-Reits) have adopted a diversification strategy, investing in different market segments including industrial, retail, office, and hospitality assets. This provides Reit managers with greater flexibility to build resilient portfolios with growth opportunities. Such diversification may also appeal to investors seeking broader exposure across industries to mitigate potential slowdowns in any single sector.
Year-to-date, the largest diversified S-Reits in the Singapore market have outperformed. As of March 13, three such Reits in the Straits Times Index (STI) ranked among the top 10 gainers in the iEdge S-Reit Index for the year.
CapitaLand Integrated Commercial Trust: C38U -0.95% (CICT), Singapore's largest S-Reit, holds a diversified portfolio of office and retail assets. Its units have risen 9.3% in the year to March 13, ranking third in the iEdge S-Reit Index.
For FY2024, CICT's net property income grew 3.4% year-on-year to S$1.2 billion. Distribution per unit also increased by 1.2% to S$0.1088. This performance was driven by higher gross rental income and lower operating expenses, despite the absence of rental income from the ongoing asset enhancement initiative (AEI) at Gallileo and the divestment of 21 Collyer Quay.
As of December 31, 2024, committed occupancy rates across all three of CICT's business segments—retail, office, and integrated developments—improved from the previous quarter. The trust will continue to monitor the market for portfolio restructuring opportunities but remains disciplined, focusing primarily on Singapore. The manager will also regularly review AEI opportunities based on asset attributes and growth potential.
Smaller Singapore Reits
Other STI-listed Reits with diversified investments include Mapletree Pan Asia Commercial Trust: N2IU 0% (MPACT) and Frasers Logistics & Commercial Trust: BUOU 0%, which rose 2.5% and 2.3%, respectively, in the year to March 2013.
MPACT's manager noted in its Q3 FY2025 results that stable performance in Singapore offset adverse overseas factors. The Reit's revenue for the quarter fell 7.4% year-on-year to S$223.7 million, weighed down by reduced overseas contributions and a stronger Singapore dollar. However, its Singapore assets showed resilience, with gross revenue (excluding Mapletree Anson) up 0.2% year-on-year, driven by strong performance at VivoCity despite ongoing AEI.
Beyond the STI, other diversified Singapore Reits include Suntec Reit: T82U -1.71%, OUE Reit: TS0U +1.79%, Lendlease Global Commercial Reit: JYEU 0%, CapitaLand China Trust: AU8U -0.69%, CapitaLand India Trust: CY6U +0.53%, IReit Global: UD1U -2%, and Stoneweg European Reit: CWBU 0%.
OUE Reit reported FY2024 revenue of S$295.5 million, up 3.7% year-on-year, supported by stable performance in its Singapore office portfolio and strong hospitality assets. Despite higher financing costs, distributable income for H2 FY2024 rose 8% year-on-year to S$62.4 million, including S$2.5 million from the partial divestment of OUE Bayfront.
As of December 31, 2024, the Reit's office assets maintained a healthy committed occupancy rate of 94.6%, with a positive rental reversion of 10.7% for FY2024. Hospitality revenue grew 8.9% year-on-year to S$105.9 million, driven by strong concert and MICE (meetings, incentives, conferences, and exhibitions) demand in H1 2024 and continued improvement in visitor numbers throughout the year.
With improving capital market sentiment, OUE Reit will focus on portfolio restructuring opportunities to unlock value. It aims to increase the hospitality sector's revenue contribution from the current 35% to 40%, while exploring opportunities in key gateway cities such as Melbourne, Australia, and Hong Kong.
As of March 13, the 10 diversified S-Reits maintained an average distribution yield of 7.6%, outperforming the broader S-Reit market. Their average price-to-book ratio of 0.7 also remained slightly below the S-Reit average of 0.8.