S-Reits on expansion trail again

With economy on even keel, they are set to pick up good buys in region

SINGAPORE real estate investment trusts (S-Reits) appear to be back on the acquisition trail after facing some serious financial woes in recent times.

Several Reits here have been scouting the region, picking up good buys, now that the economy is back on an even keel.

Reits have proven very popular among investors here. They usually own a portfolio of a particular type of property and derive income from rents. Unitholders receive regular payments.

But it was a different story last March when a National University of Singapore forum on Reits noted that their overall value had plunged about 60 per cent after the onset of the global financial crisis.

Refinancing and recapitalisation risks were high. So too was S-Reit debt, estimated to amount to $4.6 billion last year.

But by September, a special report by Fitch ratings noted that S-Reits had managed to refinance most of their debt obligations and share prices were recovering.

Mr Vincent Yeo, chief executive of M&C Reit Management, the manager of CDL Hospitality Reit (H-Reit), believes the successful refinancing of loans and the flurry of capital-raising activities, particularly in the second half of last year, reflect easing credit conditions.

Credit margins, however, are still wider than before the crisis, a spokesman for Ascendas Reit (A-Reit) pointed out.

But the easing conditions seem to be enough. In the last three months, S-Reits increasingly bought assets, with most deals being done out of Singapore.

H-Reit, Keppel Land’s K-Reit Asia and Starhill Global Reit all went Down Under by investing in Brisbane and Perth. Starhill Global Reit also bought two retail properties in Kuala Lumpur.