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The Biggest REIT in Singapore and Its Counterpart in Malaysia

Both Singapore and Malaysia have an established real estate investment trust (REIT) market with a long history.

Singapore’s first REIT to be listed on the local stock exchange in 2002 was CapitaLand Mall Trust (SGX: C38U). Meanwhile, in Malaysia, Amanah Harta Tanah PNB (KLSE: 4952.KL) became the country’s first listed REIT more than a decade before CapitaLand Mall Trust.

CapitaLand Mall Trust remains the largest listed REIT in Singapore by market capitalisation while in Malaysia, the biggest REIT is KLCC Stapled Group (KLSE: 5235SS.KL), which owns the famous Twin Towers.

Background on the REIT giants

CapitaLand Mall Trust is a retail REIT that owns 15 shopping malls in Singapore, including Tampines Mall, Bugis Junction, and Plaza Singapura. It also holds slightly below 13% of CapitaLand Retail China Trust (SGX: AU8U), the first China shopping mall REIT in Singapore. CapitaLand Limited (SGX: C31), one of the largest real estate developers in Asia, is the sponsor of both REITs. At the time of writing, CapitaLand Mall Trust has a market capitalisation of S$8.96 billion.

On the other hand, KLCC Stapled Group is made up of two parts – KLCC Property Holdings Berhad and KLCC REIT. KLCC Property Holdings Berhad has stakes in Suria KLCCMandarin Oriental (in Kuala Lumpur), and Menara Maxis. KLCC REIT, meanwhile, owns PETRONAS Twin TowersMenara 3 PETRONAS and Menara ExxonMobil. Currently, KLCC Stapled Group has a market capitalisation of RM 14.33 billion (around S$4.76 billion).

Historical distribution growth

CapitaLand Mall Trust’s distribution per unit has climbed from 10.27 Singapore cents in 2013 to 11.50 Singapore cents in 2018. The increase translates to an annualised growth of 2.3%.

KLCC Stapled Group has produced better growth than CapitaLand Mall Trust at 5.0% per annum from 2013 to 2018. The following chart shows how KLCC Stapled Group’s distribution per stapled security has improved over the years (amount in Malaysia sen):Source: KLCC Stapled Group 2018 earnings presentation

KLCC Stapled Group certainly has done better than its counterpart in terms of distribution growth.

Balance sheet strength

As of 31 December 2018, CapitaLand Mall Trust had a gearing ratio of 34.2% while KLCC Stapled Group’s gearing ratio stood at 17.2%.

By looking at the gearing ratio alone, KLCC Stapled Group has a stronger balance sheet. It can also lever up more for growth through acquisitions before it hits the 50% regulatory gearing ceiling for Malaysian REITs. In Singapore, the leverage cap for REITs is at 45%.

Valuation

CapitaLand Mall Trust’s current unit price is at S$2.43. At that price, it has a price-to-book (PB) ratio of 1.2 and a distribution yield of 4.7%. In comparison, at KLCC Stapled Group’s current unit price of RM 7.94, it is going at a PB ratio of 1.1 and a distribution yield of 4.7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommendations on CapitaLand Mall Trust, KLCC Stapled Group, CapitaLand Retail China Trust and CapitaLand Limited. Motley Fool Singapore contributor Sudhan P owns units in CapitaLand Mall Trust.