A Brief History of REITs in the Straits Times Index

Real estate investment trusts (REITs) have come a long way in Singapore’s stock market. CapitaLand Mall Trust (SGX: C38U), a retail mall-focused REIT, was the very first REIT to be listed in Singapore, all the way back in 2002.

It was also the first REIT to be included into our local market benchmark, the Straits Times Index (SGX: ^STI). In addition, CapitaLand Mall Trust happened to be the only REIT in the Straits Times Index up till 2014. That’s when Ascendas Real Estate Investment Trust (SGX: A17U) joined the fray.

The pace has picked up from there.

CapitaLand Mall Trust’s corporate cousin, CapitaLand Commercial Trust (SGX: C61U), made its debut in the Straits Times Index earlier this year. If the reserve list for the Straits Times Index is any indication, there might be more REITs to come in the years ahead.

Right now, there are four other REITs waiting in the wings to join the Straits Times Index. Let’s have a look at them (data as of 16 September 2016 unless otherwise stated):

  1. Mapletree Commercial Trust (SGX: N2IU) is the largest REIT by market capitalisation (S$4.50 billion) on the reserve list. Despite its name, which suggests a slant toward commercial properties, the majority of the REIT’s revenue actually comes from the retail mall, VivoCity. Mapletree Commercial Trust offers a 5.1% yield and has turned in a total return of over 64% over the last three years. If added to the Straits Times Index, Mapletree Commercial Trust will offer exposure to both the commercial and retail office market.
  2. Suntec Real Estate Investment Trust (SGX: T82U) is the next largest by market cap (S$4.23 billion). The REIT also offers the commercial and retail combo that Mapletree Commercial Trust does. Suntec REIT has a distribution yield of around 6% and has clocked a total return of around 24% over the last three years. Given its name, it’s perhaps no surprise to know that the Suntec City property in Singapore’s central business district is the most important asset for Suntec REIT.
  3. Commercial REIT Keppel REIT (SGX: K17U) is also one of the REITs that is part of the Straits Times Index’s reserve list. It has a market cap of S$3.59 billion and a distribution yield of 5.9%. The REIT’s three-year total return has not been too impressive, coming in at just 8.8%. Keppel REIT has properties in both Singapore and Australia; locally, some of its properties are Ocean Financial Centre and One Raffles Quay.
  4. Mapletree Industrial Trust (SGX: ME8U), with a market cap of S$3.14 billion, is the smallest REIT in the reserve list. The REIT is slightly different compared to Ascendas REIT (another industrial REIT), which is more geographically diversified. Mapletree Industrial Trust focuses on industrial properties in Singapore and offers a 6.6% distribution yield. It has also generated a total return of 65% over the last three years.

It’s not a guarantee that any of the reserve list REITs mentioned above will make it into the Straits Times Index. The latest addition to the index, Jardine Matheson Holdings Limited (SGX: J36), was added even though it was not on the reserve list.

But, the odds seem to favour more REITs in the Straits Times Index in the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Suntec REIT.