To The Moon

On average, S-Reits have maintained an average gearing ratio of 36.8%, based on latest company filings which were extracted in mid-August 2022. The 5 S-Reits with the lowest gearing ratios reported are $DigiCore Reit USD(DCRU.SI)$, $SASSEUR REIT(CRPU.SI)$, $FRASERS LOGISTICS & IND TRUST(BUOU.SI)$, $SPH REIT(SK6U.SI)$ and $IREIT GLOBAL(UD1U.SI)$.

Gearing ratio, also known as aggregated leverage, is the ratio of a Reit’s total debt to its total assets. This is a metric closely monitored by investors and is often used to assess a Reit’s financial leverage. A lower gearing ratio could point to greater capacity to undertake more debt when needed for future acquisitions while a higher gearing ratio could lead to credit concerns, especially during economic downturns.Based on the sector’s average gearing ratio of 36.8% and regulatory limit of 50%, this translates into approximately S$22.6 billion (based on Bloomberg data for total assets multiplied by company-reported gearing ratio) of potential debt headroom for the sector, to fund capital-intensive acquisitions.

1. $DigiCore Reit USD(DCRU.SI)$

Digital Core Reit reported 25.7% aggregated leverage as of Jun 30, 2022 and estimates a debt headroom of US$194 million at 35% aggregated leverage. The Reit expects to make its first distribution of 2.37 US cents to unitholders on Sep 28 and is prepared to embark on its maiden acquisition of data centres in Frankfurt, Dallas, and Chicago. The acquisition is expected to be DPU-accretive and may be funded with debt. An EGM is expected to be scheduled in the third quarter.

2. $SASSEUR REIT(CRPU.SI)$

Sasseur Reit has consistently maintained one of the lowest gearing ratios among S-Reits at 26.5% aggregated leverage as of Jun 30, 2022 and estimates a debt headroom of S$904.7 million based on the regulatory limit of 50%. With onshore and offshore debts of approximately S$510.9 million maturing in March 2023, the Reit aims to complete its debt refinancing exercise by end 2022.

3. $FRASERS LOGISTICS & IND TRUST(BUOU.SI)$

Frasers Logistics & Commercial Trust reported aggregate leverage of 29.2% as of Jun 30, 2022, down 3.9 percentage points from a quarter ago. Based on the regulatory limit of 50%, the Reit has estimated debt headroom of S$2,877 million. The Reit’s logistics and industrial portfolio maintained full occupancy with no expiries in Q4FY22 while the commercial portfolio reported occupancy rate of 91.3%. The Reit expects the overall operating environment to further improve with strong tenant activity observed, as countries progressively return to normalcy.

4. $SPH REIT(SK6U.SI)$

SPH Reit reported 30.1% gearing as of May 31, 2022 and updated that this provides debt headroom flexibility with access to additional liquidity from S$225 million of undrawn revolving credit facility lines. The Reit maintained a high occupancy rate of 97.6%. The Reit’s year-to-date Q3 gross revenue registered an increase of 0.9% year on year to S$211.6 million and declared Q3FY22 DPU of 1.45 cents, increasing 5.1% year on year.

5. $IREIT GLOBAL(UD1U.SI)$

IReit Global’s aggregate leverage improved from 32.1% as of Dec 31, 2021 to 30.8% as of Jun 30, 2022. This was mainly driven by the 6-year lease extension for 100% of Bonn Campus and a 12-year major new lease for approximately 5,300 sqm data centre space at Sant Cugat Green in Q2 2022. This in turn contributed to the increase in the Reit’s portfolio valuation to surpass the 1.0 billion euro mark.

Source: https://www.sgx.com/research-education/market-updates/20220912-reit-watch-five-s-reits-lowest-gearing-ratios