REIT Watch - Data centre, industrial as well as diversified S-Reits leading Q3 2022 performance

GLOBAL stock markets have been led by technology, consumer cyclicals and Reit sectors in Q3 2022-to-date. In Singapore, the S-Reits and property trusts sector gained 4.9 per cent in total returns and received S$8 million of net institutional inflows during this period.

The sector’s performance was led by trusts within the data centre, industrial and diversified sub-segments. These 3 sub-segments averaged 12 per cent, 8.2 per cent and 4 per cent respectively in total returns in the Q3 2022-to-date.

The top 5 performing trusts in Q3 2022-to-date were Digital Core Reit, Daiwa House Logistics Trust, EC World Reit, Frasers Logistics & Commercial Trust and Ascendas India Trust.

Digital Core Reit, a pure-play data centre S-Reit which listed in December 2021, reported its first half-year financial results and declared a distribution per unit (DPU) of 2.37 US cents for the period from Dec 6, 2021 to Jun 30, 2022. Its portfolio value stands at US$1.46 billion with a 100 per cent occupancy rate. The Reit will be targeting new markets such as Frankfurt, Chicago and Dallas for acquisitions.

Daiwa House Logistics Trust, which also listed in 2021, has a portfolio of 14 logistics assets across Japan, valued at 81 billion yen (S$832 million). The trust announced a DPU of 3.09 Singapore cents for the period from Nov 26, 2021 to Jun 30, 2022. The trust manager believes that while a large supply of logistics space is expected in 2022 and 2023, demand is expected to remain buoyant due to business expansions, relocation for more efficient network, obsolescence of current existing facilities, and increase in the volume of storage goods.

EC World Reit reported H1 2022 net property income (NPI) of S$57.9 million, registering a year-on-year growth of 4.2 per cent, and H1 2022 DPU of 2.77 Singapore cents, representing a year-on-year decline of 9.6 per cent. The Reit manager noted that recent lockdowns in China which occurred in the second quarter, did not have material impact on the Reit. EC World Reit believes that domestic demand in China will continue to grow, with online retail set to increase faster than offline retail in 2022. The Reit will continue to focus on its e-commerce and downstream logistics properties to capture the pent-up demand for logistics services and warehousing facilities.

Frasers Logistics & Commercial Trust in its Q3 2022 business update noted that it achieved full occupancy rate for its logistics and industrial assets while commercial assets maintained occupancy rates of 91.3 per cent. The trust believes that the overall operating environment is expected to further improve and observed strong tenant activity as countries continue to adopt an endemic approach to living with Covid-19 with a progressive return towards normalcy.

Ascendas India Trust reported a 9 per cent year-on-year increase for H1 2022 NPI and declared H1 2022 DPU of 4.28 Singapore cents, representing an increase of 2 per cent year on year. The trust noted that the stronger performance was backed by higher occupancy in major IT parks and observed an increase in physical park population, as India resumes normalcy. 

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