Macro Analysis /

Singapore REITs Monthly – Recovering with the economy

  • STI outperformed FTSE S-REIT Index in January, as investors rotated to cyclical sectors to tap recovery prospects

  • Sector yield spread over benchmark 10-year SGS (10YSGS) was 303bps, at -0.7SD

  • Remain OVERWEIGHT with sector catalysts expected from pick-up in economy activity, interest savings and acquisitions

Natalie Ong Pei Fong
Natalie Ong Pei Fong

Equity Research Analyst- Property & REITs

20 January 2021
Published byPhillipCapital


Four inter-conditional resolutions to approve Eagle Hospitality Trust’s (EHT SP, Not Rated) rescue and recapitalisation plan failed to pass an EGM on 30 December 2020. The EGM was convened for voting on: i) the appointment of SCCPRE HRM as its new REIT Manager; ii) approval of the new Manager’s fee structure; iii) the appointment of SCCRPRE HTM as the new Trustee-Manager; and iv) the issuance of 140mn new units as payment of base fees to the new REIT Manager. The appointment of SCCPRE as the new REIT Manager was crucial as EHT’s working capital was to have run out by December 2020. Ongoing negotiations with lenders were contingent on the appointment of SCCPRE as the new Manager. As SCCPRE HRM was not appointed, EHT would not have sufficient resources to operate as a going concern beyond December 2020. Additionally, its incumbent REIT Manager had been removed after the EGM, in compliance with an MAS directive issued on 30 November. EHT appears to be headed towards a Chapter 11 bankruptcy filing and sale of assets.

Keppel REIT (KREIT SP, Not Rated) will acquire Keppel Bay Tower for S$657.2mn, at 1.2%/1.5% discounts to JLL’s/Cushman & Wakefield’s valuations and an LTV of 60%. The property comprises an 18-storey office tower and a six-storey podium block, with a combined net lettable area of 386,600 sq ft. Target completion of the acquisition is 2Q21. The acquisition is expected to provide a 2.7% pro-forma DPU accretion bases on an LTV ratio of 60%.

Frasers Centrepoint Trust (FCT SP, BUY, TP S$2.79) announced its divestment of Anchorpoint mall on 23 December 2020. The 71,213 sq ft mall comprising two retail levels has been sold to unrelated third parties for S$110mn. The sale is expected to be completed on 21 March 2021.


November 2020’s seasonally-adjusted Retail Sales Index ex-motor vehicles eased to -3.1% YoY, boosted by mega-sales events such as the 11.11 Singles’ Day and Black Friday on 26 November. This was an improvement over October’s -11.4%. Online sales accounted for 16.7% of total sales, slightly higher than the 13% average under Phase 2 reopening.


With more firms rolling out permanent hybrid work arrangements, more right-sizing is expected over the next 2-3 years when leases come due. We think that office rents will remain under pressure in 2021, even though oversupply can be mitigated by office stock taken offline for redevelopment in 2021/22.


The outlook for data centres, hi-spec and business parks remains favourable. These asset classes are supported by a growing technology sector and low supply under construction. In the near term, rents may still be under pressure as businesses remain cautious.


RevPAR dipped 2.3% MoM in November, as higher average daily rates (ADRs) were wiped out by lower occupancy. Industry occupancy of 53.8% was 35.1ppts lower YoY. The sector was weighed down by the mid-tier and economy segments.



REITs have resumed their quest for acquisitions, spurred by low interest rates and share-price recoveries. The establishment of travel channels with more countries is expected to pave the way for more overseas asset acquisition negotiations. With interest rates expected to remain low, share prices recovering and confidence returning to capital markets, there could be more M&A opportunities for the REITs.