OREANDA-NEWS. There are 28 REITs and six stapled securities listed on Singapore Exchange (SGX), of which six are GICS®-categorised Commercial REITs. They are CapitaCommercial Trust, Keppel REIT, Frasers Commercial Trust, OUE Commercial Real Estate Investment Trust and IREIT Global, as well as Viva Industrial Trust. Viva is excluded from this report as its business parks are primarily for industrial purposes rather than office or commercial use.

The five commercial REITs – CapitaCommercial Trust, Keppel REIT, Frasers Commercial Trust, OUE Commercial Real Estate Investment Trust and IREIT Global – have a combined market capitalisation of S\$10.7 billion, and averaged a dividend-adjusted total return of 0.9% in the year thus far. The newest addition to the group – IREIT Global – is a commercial REIT focusing only on real estate in Europe, and was listed on SGX last August.

Over the last 12 months, the other four REITs generated an average dividend-adjusted total return of 12.1%, and maintained an average dividend yield of 5.6%. This is nearly double the yield of the Singapore Fixed Income (SFI) Index at 2.99%.

OUE Commercial REIT and IREIT Global reported March quarter results on 6 May and 7 May respectively. Keppel REIT released its quarterly earnings on 13 April, while CapitaCommercial Trust and Frasers Commercial Trust posted their quarterly results on 22 April and 23 April respectively.

The five commercial REITs averaged a distribution per unit (DPU) of 1.85 Singapore cents for the quarter ended March 31, 2015. Frasers Commercial Trust posted the highest DPU of 2.38 cents, up 16% year-over-year, while OUE Commercial REIT reported the lowest DPU of 1.44 cents, reflecting a rise of 2.4%, and Keppel REIT registered a year-on-year decline of 14% in its DPU to 1.70 cents.

The four commercial REITs said in their results presentations that they expect Singapore office rentals this year to be well-supported by limited new supply in the central business district and low vacancy rates. As for Europe, IREIT sees demand for German commercial property remaining strong, as a robust labour market with rising wages and employment boosts domestic consumption.

Financial results for quarter ended March 31, 2015

REITs Distribution per unit (Singapore cents) YoY % change Net property income (S\$M) YoY % change Gross revenue (S\$M) YoY % change
OUE Commercial REIT 1.44 2.4** 15.7 8.3** 20.4 5.0**
IREIT Global 1.61# NA 5.0^ NA 5.6^ NA
CapitaLand Commercial Trust 2.12 3.9 54.0 6.4 68.2 6.5
Keppel REIT 1.70 -13.7 34.6 -12.0 42.4* -9.4
Frasers Commercial Trust 2.38 16.1 24.7 14.0 34.8 22.0
Average 1.85          

Debt profiles for quarter ended March 31, 2015

REITs Aggregate Leverage Ratio (%) March qtr. 2015 Aggregate Leverage Ratio (%) March qtr. 2014 Interest Cover Ratio March qtr. 2015 Interest Cover Ratio March qtr. 2014
OUE Commercial REIT 39.0 41.0 3.9x 3.9x
IREIT Global 32.0 NA 13.0x NA
CapitaLand Commercial Trust 29.9# 30.0# 7.6x 6.6x
Keppel REIT 42.0 42.0 4.6x 5.4x
Frasers Commercial Trust 37.0# 38.0# 4.4x 4.2x