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Is Australia The Next Big Playground For Singapore’s Industrial REITs?

Mapletree Logistics Trust (SGX:M44U) recently made some purchases in Australia in what appears to be in a hurry.

On the morning of 15 December 2016, the real estate investment trust announced its proposal to acquire four logistics properties in Victoria, Australia. By evening on the same day, the trust had announced the completion of the acquisitions.

The four properties have a value of A$142.2 million (around S$151.9 million) and would provide a net property income yield of 7.6% for the trust. The properties are also currently 100% leased out.

According to Mapletree Logistics Trust’s presentation, the acquisitions would increase its exposure to Australia from 6.1% to 9.0% based on each geography’s gross revenue contribution.

Interestingly, Mapletree Logistics Trust is not the only Singapore-listed industrial REIT that has been investing in Australia in recent times.

In December 2015, Ascendas Real Estate Investment Trust (SGX: A17U) announced a massive A$1.01 billion investment in Australia; the deal saw the REIT acquiring 26 logistics properties in the country from both Frasers Centrepoint Ltd (SGX: TQ5) and GIC, which is one of the investment arms of Singapore’s government.

Frasers Centrepoint itself was a huge investor into Australia when it took over Australand Property Group in 2014. Apart from selling part of its portfolio in Australia to Ascendas REIT, Frasers Centrepoint also spun-off its Australia-based industrial and logistics properties in June this year via the listing of a new REIT, Frasers Logistics and Industrial Trust (SGX: BUOU).

Given all these deals happening in Australia, is the country the new playground for industrial REITs in Singapore?

There are currently four industrial REITs in Singapore’s market with a market capitalisation of a billion dollars or more, namely, Ascendas REIT, Mapletree Logistics Trust, Frasers Logistics and Industrial Trust, and Mapletree Industrial Trust  (SGX: ME8U).

Of the group of four, the first three all have exposure to Australia now. In fact, Frasers Logistics and Industrial Trust has assets only in Australia. The recent deals highlight the growing importance of industrial properties in Australia to Singapore’s property investors.

For investors interested in industrial REITs in Singapore, it is important to know that the Australian industrial property market might have a huge and growing role to play in the REITs’ futures.

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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 writer Stanley Lim owns shares in Frasers Centrepoint.