Positive signs for Singapore to be regional Reit hub
Published February 6, 2006
BT
NEWS ANALYSIS
Market players believe HK is shaping up as key challenger to Singapore's position
By LESLIE YEE
(SINGAPORE) In July 2002, CapitaMall Trust became the first real estate investment trust (Reit) to successfully list in Singapore.
Experts believe Singapore's continued leadership in Reits in Asia ex-Japan will depend on its ability to innovate and to attract more Reits owning properties in multiple countries.
The Hong Kong market had to wait until November last year - at which point Singapore already had seven Reits listed - to see its first Reit successfully listed, namely Link Reit. However, Link Reit's size dwarfs that of Singapore's Reits. Its successful listing was quickly followed by listings of Prosperity Reit and GZI Reit.
Experts believe there may be as many as 10 Reit initial public offerings in Hong Kong this year. Hong Kong property giants like Henderson Land and Sun Hung Kai Properties are tipped to join the Reit bandwagon.
Market players believe Hong Kong is quickly shaping up as a key challenger to Singapore's position as the Asia ex-Japan market leader in Reits. Opinion though is divided as to whether the development of Hong Kong's Reit market will help or hurt Singapore.
Optimists think a larger Reit sector in Asia ex-Japan will draw more global investors to invest in Asia ex-Japan Reits. Others take the view that funds dedicated to yield plays may choose one market over the other.
The later part of last year marked the end of the easy money phase for Reit investors. Rising interest rates in Singapore caused prices of Reits to slide. Concerns were raised over the ability of some Reits to grow via acquisitions.
But Singapore's Reit market is not standing still and investor support is intact. Last month, Mapletree Logistics Trust (MLT) raised $130 million in equity from a placement of new units to institutional investors that was close to four times subscribed and an ATM offering that was fully taken up within eight minutes of the opening of the offering.
About two weeks back, CapitaLand's subsidiary, the Ascott Group, announced its intention to establish a new pan-Asian service residence Reit to be called Ascott Residence Trust (ART). ART will have an initial portfolio of 12 properties and will be listed on the Singapore Exchange.
Citigroup Research said 'ART will be a more capital efficient vehicle to hold Ascott's properties' and 'CapitaLand is a beneficiary of the expanding Reit market in Asia given its strong track record in Singapore and its ability to offer a complete range of real estate services'.
Certainly, CapitaLand continues to set the pace in the Reit sector in Asia ex-Japan. Of more significance for the Singapore Reit market is that ART represents a broadening of the type of Reits in Singapore and the increasing importance of foreign properties in Singapore Reits.
Experts believe Singapore's continued leadership in Reits in Asia ex-Japan will depend on its ability to innovate by broadening the type of Reits in the Singapore market and to attract more Reits owning properties in multiple countries.
With ART, the Singapore market moves beyond having Reits owning retail, office and industrial properties. A successful listing of ART could pave the way for Millennium & Copthorne Hotels to launch a hotel Reit here.
Bankers would say any property type that generates strong enough cash flow could find its way into a Reit. Perhaps it would not be beyond the imagination and ability of bankers and other practitioners here to create hospital, airport and prison Reits.
ART holds $856 million worth of properties, with Singapore accounting for 33 per cent of total property values. The rest comprises properties from China, Vietnam, Indonesia and the Philippines. With ART, there are challenges such as whether investors like to own a Reit with properties in various jurisdictions and whether investors are comfortable with around 45 per cent of total apartment rental income backed by length of stay of less than six months.
How popular ART proves with investors, time will tell. MLT's successful equity raising, which was to help fund among others, acquisitions of properties in China and Hong Kong, though shows there is appetite from both institutional and retail investors to back Singapore Reits in making overseas acquisitions.
Reits have been the bright spot in the Singapore capital markets and a major driver in growth of market capitalisation on the SGX. By being early in this game, experts believe Singapore's market players and regulators have an edge over other emerging Reit markets.
There will be competition from other jurisdictions but the signs are positive for Singapore to be the Reit hub for the region.
BT
NEWS ANALYSIS
Market players believe HK is shaping up as key challenger to Singapore's position
By LESLIE YEE
(SINGAPORE) In July 2002, CapitaMall Trust became the first real estate investment trust (Reit) to successfully list in Singapore.
Experts believe Singapore's continued leadership in Reits in Asia ex-Japan will depend on its ability to innovate and to attract more Reits owning properties in multiple countries.
The Hong Kong market had to wait until November last year - at which point Singapore already had seven Reits listed - to see its first Reit successfully listed, namely Link Reit. However, Link Reit's size dwarfs that of Singapore's Reits. Its successful listing was quickly followed by listings of Prosperity Reit and GZI Reit.
Experts believe there may be as many as 10 Reit initial public offerings in Hong Kong this year. Hong Kong property giants like Henderson Land and Sun Hung Kai Properties are tipped to join the Reit bandwagon.
Market players believe Hong Kong is quickly shaping up as a key challenger to Singapore's position as the Asia ex-Japan market leader in Reits. Opinion though is divided as to whether the development of Hong Kong's Reit market will help or hurt Singapore.
Optimists think a larger Reit sector in Asia ex-Japan will draw more global investors to invest in Asia ex-Japan Reits. Others take the view that funds dedicated to yield plays may choose one market over the other.
The later part of last year marked the end of the easy money phase for Reit investors. Rising interest rates in Singapore caused prices of Reits to slide. Concerns were raised over the ability of some Reits to grow via acquisitions.
But Singapore's Reit market is not standing still and investor support is intact. Last month, Mapletree Logistics Trust (MLT) raised $130 million in equity from a placement of new units to institutional investors that was close to four times subscribed and an ATM offering that was fully taken up within eight minutes of the opening of the offering.
About two weeks back, CapitaLand's subsidiary, the Ascott Group, announced its intention to establish a new pan-Asian service residence Reit to be called Ascott Residence Trust (ART). ART will have an initial portfolio of 12 properties and will be listed on the Singapore Exchange.
Citigroup Research said 'ART will be a more capital efficient vehicle to hold Ascott's properties' and 'CapitaLand is a beneficiary of the expanding Reit market in Asia given its strong track record in Singapore and its ability to offer a complete range of real estate services'.
Certainly, CapitaLand continues to set the pace in the Reit sector in Asia ex-Japan. Of more significance for the Singapore Reit market is that ART represents a broadening of the type of Reits in Singapore and the increasing importance of foreign properties in Singapore Reits.
Experts believe Singapore's continued leadership in Reits in Asia ex-Japan will depend on its ability to innovate by broadening the type of Reits in the Singapore market and to attract more Reits owning properties in multiple countries.
With ART, the Singapore market moves beyond having Reits owning retail, office and industrial properties. A successful listing of ART could pave the way for Millennium & Copthorne Hotels to launch a hotel Reit here.
Bankers would say any property type that generates strong enough cash flow could find its way into a Reit. Perhaps it would not be beyond the imagination and ability of bankers and other practitioners here to create hospital, airport and prison Reits.
ART holds $856 million worth of properties, with Singapore accounting for 33 per cent of total property values. The rest comprises properties from China, Vietnam, Indonesia and the Philippines. With ART, there are challenges such as whether investors like to own a Reit with properties in various jurisdictions and whether investors are comfortable with around 45 per cent of total apartment rental income backed by length of stay of less than six months.
How popular ART proves with investors, time will tell. MLT's successful equity raising, which was to help fund among others, acquisitions of properties in China and Hong Kong, though shows there is appetite from both institutional and retail investors to back Singapore Reits in making overseas acquisitions.
Reits have been the bright spot in the Singapore capital markets and a major driver in growth of market capitalisation on the SGX. By being early in this game, experts believe Singapore's market players and regulators have an edge over other emerging Reit markets.
There will be competition from other jurisdictions but the signs are positive for Singapore to be the Reit hub for the region.
posted by SmartYInvestor at 3:28 AM
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