To The Moon

The US inflation rate has recently declined to a more than two-year low, reaching 3% last month, marking just one-third of the level it was a year ago. This drop in inflation has led to plunging yields on short-term Treasury yields. This could indicate that the Federal Reserve is nearing the end of its hiking cycle.

A beneficiary of lower interest rate is the Singapore REITs (S-REITs).

Currently, the Singapore REITS is trading at 6.2% dividend yield and 0.93x P/B, as indicated by the FTSE ST All-Share Real Estate Investment Trusts Index.

Below is an overview of the largest S-REITs:

• CapitaLand Integrated Commercial Trust

• CapitaLand Ascendas REIT

• Mapletree Pan Asia Commercial Trust

CapitaLand Integrated Commercial Trust (CICT)

CapitaLand Integrated Commercial Trust (CICT) emerged from the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust, becoming a major player in the real estate investment trust (REIT) sector. With an extensive portfolio of 26 properties worth approximately S$24 billion, CICT's assets are diversified across Singapore, Australia, and Germany, comprising office, retail, and hospitality sectors.

The trust is well-positioned for a positive earnings recovery as business activities normalize post-COVID-19 restrictions. The downtown mall portfolio is expected to rebound with the return of workers to the central business district and the reopening of Singapore's borders to tourists. CICT's focus on high-quality suburban retail malls also offers resilience, making it an attractive choice in the REIT market.

CICT is trading at 0.93x P/B and 5.6% dividend yield.

CapitaLand Ascendas REIT (CLAR)

CapitaLand Ascendas REIT (CLAR), formerly known as Ascendas REIT (AREIT), focuses on industrial properties, including business/science parks, hi-tech industrial space, logistics facilities, light industrial assets, and data centers. Its extensive portfolio comprises 98 properties in Singapore, 37 in Australia, 42 in the UK, 48 in the US, and 7 in Europe, with a total net lettable area of 52.9 million sqf valued at approximately S$17.9 billion.

CLAR is a beneficiary of the structural growth in e-commerce (logistics/warehouses), data centers, and new economy/tech through its business parks and high-tech buildings further contributes to its positive outlook, representing around 81% of its portfolio.

CLAR is trading at 1.16x P/B and 5.6% dividend yield.

Mapletree Pan Asia Commercial Trust (MPACT)

Mapletree Pan Asia Commercial Trust (MPACT) emerged from the merger of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MAGIC) in July 2022. With a diverse portfolio of 18 properties across Singapore, Hong Kong, China, Japan, and South Korea, MPACT commands approximately S$17.1 billion in assets under management. The portfolio includes a mix of retail, office, and business park properties, with key assets such as VivoCity, Singapore's largest mall, and Festival Walk, a landmark retail mall in Hong Kong. Mapletree Business City, which houses MPACT's largest tenant Google, is another significant component of its holdings.

As the Hong Kong market reopens, MPACT anticipates a boost in Festival Walk's tenant sales, already reaching 75% of pre-COVID levels. However, the trust is also facing challenges, including the exit of its third-largest tenant, Seiko, from SMB in June 2024.

MPACT is trading at 0.93x P/B and 5.6% dividend yield.

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