PRICES of Reits have been sensitive to interest rates as evident by recent global movements. As 10-year US Government Bond yields dropped from the highs seen in mid-October, the S-Reits’ benchmark – iEdge S-Reit Index – gained 7.2 per cent on a total return basis in the November month to date till Nov 16. This narrowed the year-to-date decline of the index from 9.0 per cent as at end-October to 2.4 per cent.

All S-Reits and property trusts recorded positive total returns in the month to date till Nov 16, except for Dasin Retail Trust. : CEDU 0% Among them, 10 recorded double-digit gains, averaging 28.9 per cent. Most of the 10 trusts have the majority of their assets under management outside of Singapore.

The top four performers across the period were dominated by office Reits, averaging 53.9 per cent total returns. Three of them – Manulife US Reit : BTOU 0% (82.9 per cent total return gains), Prime US Reit : OXMU 0% (66.0 per cent) and Keppel Pacific Oak US Reit : CMOU 0%(44.3 per cent) – are pure-play US office Reits, while Elite Commercial Reit : MXNU 0% (22.5 per cent) is a pure-play UK office Reit.

The strong rebound in November, reduced the average year-to-date decline of these four Reits from 62.6 per cent as at end-October to 45.8 per cent as at Nov 16. 

According to Cushman and Wakefield’s Q3 2023 report, US office demand remained under pressure with overall vacancy increasing by 55 bps to 19.4 per cent.

On the other hand, JLL noted that leasing activity for the UK office market remained resilient in Q3 2023, with the highest quarterly volumes of the year, totalling 2.2 million square feet. While this surpassed the previous quarter’s performance, it was still slightly below the long-term average. 

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The remainder of the six trusts with double-digit gains in November were Lendlease Global Commercial Reit : JYEU 0%(13.7 per cent total return gains), Cromwell European Reit : CWBU 0% (13.3 per cent), CapitaLand India Trust : CY6U 0%(12.5 per cent), Digital Core Reit : DCRU 0% (12.0 per cent), Keppel DC Reit : AJBU 0% (11.2 per cent) and Sasseur Reit : CRPU 0% (10.4 per cent).

Looking back at the participation in the overall S-Reits market, retail investors continued to be the net buyers of the sector in November.

For the month to date till Nov 16, retail investors net bought S$39.7 million of the sector, adding to the year-to-date retail net inflows of S$934.5 million.

Top net bought counters by retail investors in November were CapitaLand China Trust : AU8U 0% (+S$3.6 million), Mapletree Pan Asia Commercial Trust : N2IU 0% (+S$2.0 million), Prime US Reit (+S$1.8 million), Keppel Pacific Oak US Reit (+S$1.4 million) and ParkwayLife Reit : C2PU 0% (+S$1.2 million).

Similarly, increased activities were also seen across S-Reit exchange traded funds (ETFs). The combined net creations of the Lion-Phillip S-Reit ETF : CLR 0% and CSOP iEdge S-Reit Leaders ETF in October crossed S$14 million, the highest since September last year.

Retail investors net bought S$8.3 million of the two ETFs in October with total purchases at 8.5 times of total sales. Institutional net purchases also hit S$5.1 million over the month, the highest since May 2022, with total purchases at 2.9 times of total sales.

The momentum extended into November, with net creations of the two S-Reit ETFs reaching S$6.3 million in the month to date till Nov 16. Both retail and institutional investors continued to net buy the ETFs at S$3.0 million and S$2.4 million respectively. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

Source: SGX Research S-Reits & Property Trusts Chartbook.