Singapore REITs double their overseas investment to US$12bil


A US$3.1bil (RM12.97bil) merger of Mapletree Commercial Trust with Mapletree North Asia Commercial Trust proposed last month is the latest in a series of moves that have seen managers long comfortable with a domestic presence favour a more global footprint.(File pic shows Singapore's iconic Merlion with the business district in the background)

SINGAPORE: Singapore’s property managers are accelerating their push abroad as a slow reopening and diminishing returns at home force them to look for growth opportunities elsewhere.

Foreign acquisitions by real estate investment trusts (REITs) in the city-state jumped to an all-time high of 61 last year, data compiled by Bloomberg showed. The total value of such deals also more than doubled from 2020 to US$12.3bil (RM51.47bil).

Property managers in Singapore – which boasts the most REITs in Asia outside of Japan – have long shown global ambitions, with overseas investments picking up during the pandemic. But a limited reopening coupled with the anticipated Omicron surge is adding impetus to this drive, even as investor concerns over a slowing recovery grow.

“Singapore’s commercial REITs may continue to rely on overseas mergers and acquisitions to achieve income growth in 2022, especially if Omicron brings more uncertainty on further easing of social and travelling curbs to boost retail and office leasing demand in the country,” said Bloomberg Intelligence analyst Patrick Wong.

A US$3.1bil (RM12.97bil) merger of Mapletree Commercial Trust with Mapletree North Asia Commercial Trust proposed last month is the latest in a series of moves that have seen managers long comfortable with a domestic presence favour a more global footprint.

Also in December, another REIT targeting retail outlets in the city-state, CapitaLand Integrated Commercial Trust, made a foray into its second overseas market with office acquisitions in Australia.

Investors like the stability a local focus can offer, Sharon Lim, the chief executive officer of the manager of Mapletree Commercial, told reporters last month, but her trust needs to be better placed to take on new opportunities overseas and achieve “meaningful long-term expansion.”

Lim’s REIT, which she described as the “last of the Mohicans” with only Singapore-centric assets, will see its domestic holdings shrink to 51% within the new merged entity.

Overseas diversification may alienate some investors, however, with Mapletree Commercial’s shares having declined more than 8% since the merger was announced.

“Investors whose mandate demands only Singapore exposure may look at other counters,” said Krishna Guha, a senior analyst at Jefferies Financial Group Inc, adding that execution and foreign exchange risks may rise.

Still, while the CEO of Singapore’s tourism board Keith Tan has warned that a full recovery in visitor numbers is unlikely until 2025, a reopening dividend might yet emerge.

Officials in the financial centre have affirmed their determination to live with the virus and keep its borders open, while easing some restrictions, including allowing some workers back into offices.

Singapore’s latest property investment manager Capitaland Investment Ltd – a spinoff of one of the country’s largest developers – said it would remain committed to local investments despite a growing foreign portfolio.

Singapore will continue to be a “core market” and is attracting strong interest from wealthy individuals, including a growing number of family offices, said CEO Lee Chee Koon in an emailed response to questions about its plans. “But given the physical growth constraints, the relative size of our Singapore business within our portfolio will become smaller over time.” — Bloomberg

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