Singapore property: First circuit breaker scorecard

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This report summarises statistics on valuations, performance, and capital structures of the 44 real estate investment trusts (REITs) and business trusts listed in Singapore, with a combined market capitalisation of US$74.0bn. In terms of YTD price performance; SREITs are down -8.2% while Developers are down -24.7%.

The Q220 results season reinforced the resilience of Industrials with steady performance and minimal rebates required. This momentum should continue through H2 and would be supplemented by inorganic opportunities.

Headlines for Office were within expectations though the decline in market rents accelerated (-3% QoQ) and vacancies rose. Leasing activity stayed muted with little leasing progress at KREIT’s ORQ, and
CCT’s Six Battery Road and CapitaSpring.

The ‘Circuit Breaker’ phases hindered take-up though we believe tenants are also adopting a wait-and-see approach while assessing their post-pandemic space requirements. Grade A rents could undershoot our -5% 2020 forecast. In Retail, most managers increased payout ratios given better cashflow visibility upon reopening.

However, we think there would be challenges ahead as operations are far from normal. Occupancies and rents started to trend 0.8-2ppt and 0-3% lower in Q2. Store closures have been minimal and could increase.

Guidance is increasingly cautious. Suburban malls with strong neighbourhood support have demonstrated greater resilience versus downtown alternatives.

For example, the decline in FCT’s footfall narrowed to -39% in July, ahead of 50-60% fall for industry peers. Its rent reversion also stayed flat while competitors were negative.

Source: UBS

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