OREANDA-NEWS. Real Estate Investment Trusts (REITs) raise capital to purchase primarily real estate assets, usually with a view to generating income for unit holders of the fund. It allows individual investors to access real property assets and share the benefits and risks of owning a portfolio of properties, which typically distribute income at regular intervals.

Singapore REITS are required to distribute at least 90% of taxable income to the unit holders each year to enjoy tax exempt status by the Inland Revenue Authority of Singapore (IRAS). In 2015, Singapore REITs distributed approximately S$4 billion in dividends.

Singapore Exchange (SGX) lists 30 REITs and six stapled trusts. The most recent addition was Manulife US REIT, which listed on SGX on 20 May. Manulife US REIT is a Singapore REIT established with the investment strategy principally to invest, directly or indirectly, in a portfolio of income-producing office real estate in key markets in the United States, as well as real estate-related assets.

As discussed in a Market Update published 30 May 2016, the 27 REITs and six stapled trusts that reported earnings for the quarter ended 31 March 2016 averaged 1.8% YoY growth in distributions per unit (DPU), according to data compiled by the REIT Association of Singapore (REITAS).

During the quarter, these 27 REITs and six stapled trusts averaged a weighted average debt maturity level of 3.0 years, a weighted average interest cost of 2.9% and a gearing level of 35.4%. An average 82.6% of their borrowings was fixed-rate or hedged, REITAS data showed.

For the March quarter, the REITs which had the lowest weighted average interest cost were Parkway Life REIT (1.5%), iREIT Global (2.0%), Lippo Malls Indonesia Retail Trust (2.0%), Frasers Centrepoint Trust (2.3%) and Mapletree Logistics Trust (2.3%).

In terms of leverage, the trusts with the lowest gearing levels were: SPH REIT (25.7%), Mapletree Industrial Trust (28.2%), Frasers Centrepoint Trust (28.3%), CapitaLand Retail China Trust (28.7%) and BHG Retail REIT (29.5%).

The REITs with the longest weighted average debt maturity levels were: CapitaLand Mall Trust (5.3 years), Ascott Residence Trust (5.1 years), Viva Industrial Trust (4.0 years), CapitaLand Commercial Trust (3.8 years) and Keppel REIT (3.6 years).

The trusts with the highest percentage of borrowings that were hedged or on fixed rates were: Starhill Global REIT (100%), Parkway Life REIT (98.0%), Soilbuild Business Space REIT (97.9%), Cambridge Industrial Trust (96.7%), and Viva Industrial Trust (94.8%).