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Gordon Tang and his wife Celine, who have one of the largest Reit holdings in Singapore, are among those leading the charge. Suntec Real Estate Investment Trust (Suntec Reit), of which they own about a tenth, completed the acquisition of a 50 per cent stake in a London property last month, finalizing a £ 430.6 million (S $ 761 , 8 million) that had been put on hold with the pandemic.
Lippo Malls Indonesia Retail Trust and IReit Global, in which Chinese tycoon Tong Jinquan owns stakes of more than 4.8 percent, are raising money to finance acquisitions in Indonesia and Spain. Keppel Reit and Ascendas Reit bought office properties in Australia in September.
Like many other industries, Reits has been hit hard during the pandemic. More than $ 340 billion in value this year has been removed from an index that tracks it globally as employees emptied offices in major cities and shoppers turned to e-commerce.
For retail and office properties in financial centers from New York to London to Paris, the future remains bleak as companies order employees to stay home and movement restrictions are reintroduced to prevent a sudden surge. of cases. Only 15 percent of office workers in New York are expected to return by the end of 2020.
KEEP IMPROVING
But even with the resurgence of Covid-19 in most of Europe and the US, some Reits are already betting that prime properties around the world will eventually rebound and are looking for distressed opportunities.
For trusts in Singapore, which is home to the majority of the Reits in Asia except Japan, transactions are slowly picking up, driven in part by lower funding costs. Most of the S $ 3 billion in deals announced since January occurred in the third quarter, DBS Group Holdings said in a Sept. 29 note titled “S-Reits: Insatiable Growth Appetite.” He added that the market should continue to improve through the rest of the year and early 2021, with analyst Derek Tan expecting more acquisitions as the coronavirus crisis dissipates over time.
“Emergency sales related to the pandemic mean good opportunities for Asian money to enter the foreign market,” said Patrick Wong, senior analyst at Bloomberg Intelligence. “More transactions are expected to come in.”
Mapletree Logistics Trust is among those who have recently re-started their momentum abroad. It is spending S $ 1.09 billion on real estate in China, Malaysia and Vietnam.
Frasers Logistics & Commercial Trust, controlled by Thailand’s richest person, Charoen Sirivadhanabhakdi, said in August that it will acquire properties in Australia and the United Kingdom for about S $ 90 million. He’s looking for purchases even as his fortune has dropped more than $ 9 billion this year to $ 10.4 billion, according to the Bloomberg Billionaires Index.
MILLION LOST
The Tang’s wealth has also suffered, with the combined value of their holdings in three Reits currently trading lower at $ 234 million by 2020 to $ 519 million. That’s even despite a $ 40 million rally since late March, according to data compiled by Bloomberg.
In addition to the stake in Suntec Reit, the Tangs control SingHaiyi Group, a developer that has expanded to the US and Australia, and has stakes in OUE Commercial Reit, which owns properties in Singapore and Shanghai, and Cromwell European Reit.
Eagle Hospitality Trust, another of its investments, has been suspended since March because its manager defaulted on a $ 341 million loan.
Frasers Logistics declined to comment for this story.
“Despite Covid-19, we believe London will continue to be a key global market where good quality assets are sought,” said Chong Kee Hiong, CEO of ARA Trust Management (Suntec), managing director of Suntec Reit. referring to the recent purchase of the Nova development in London.
“High-quality, well-located and performance-enhancing assets in key cities were our acquisition criteria. Nova Properties fully met these requirements. We are confident that these assets are well-located to enhance the revenue stability of our Reit.”
Since the first listing of a trust in Singapore in 2002, the market has grown exponentially. The city-state has 44 Reits and real estate trusts with a combined market value of S $ 101 billion, according to an October report from the Singapore Stock Exchange. Last year, nearly 45 percent of Reit’s initial public offerings around the world debuted there, outpacing places like the United States, Australia and Japan, the exchange said.
REIT POWERHOUSE
The city-state’s tax incentives, regulatory support and growing investor appetite due to its high dividend yield (6.8% according to the Singapore Stock Exchange report) have made it a powerhouse for Reits, he said. Wong of Bloomberg Intelligence.
“Singapore has attracted several Reits with global assets in recent years,” he said. “This creates a critical mass to further attract similar Reits to listing in Singapore rather than other Asian markets such as Hong Kong and Japan.”
Due to the scarcity of land on the island, the trusts have turned abroad to grow. More than 80 percent of Singapore’s Reits and real estate trusts have invested in assets abroad, the exchange’s report showed. Australia is a key market, and the number of transactions to the country increased 72 percent in the first half of the year, although their amounts remained low, according to real estate consultancy Knight Frank.
That said, it’s not just about expanding abroad. The domestic market also looks promising as the Singapore Reits are poised to benefit from Chinese companies establishing their base on the island.
ByteDance, the owner of the video app TikTok, will move to One Raffles Quay, owned by Suntec Reit, while Alibaba Group Holding acquired a 50 percent stake in AXA Tower in May and will be an anchor tenant of the building located at the financial zone of the city. district.
“Interest in the acquisition and occupancy of commercial properties by technology companies is expected to increase in the coming year,” Knight Frank noted in its third-quarter research report.
BLOOMBERG
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