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Wisdom (2nd March 2012)

S-Reits still tops in Asia cross-border acquisitions

1st March 2012 By Amanda Eber The Business Times 2012 Singapore Press Holdings Limited Their purchases last year totaled $2.51b, says CBRE report REAL estate investment trusts (Reits) from Singapore continue to dominate cross- border acquisitions in Asia, with 17 out of 26 Singapore Reits (S-Reits) active overseas. S-Reits transacted cross-border acquisitions worth a total of $2.51 billion in 2011. The February 2012 Asia REIT ViewPoint report produced by CBRE credited S- Reits' dominance to a number of possible reasons, such as a need to diversify risk, a lack of domestic assets as well as better yields overseas. A less rigid system of asset acquisition also helped.

'Despite Asian Reits' sustained interest in expanding their portfolios, many markets only permit investment in the domestic market or require approval for overseas acquisitions,' said Danny Mohr, executive director, International Valuation, Asia. 'These regulations continue to limit cross-border investment activity, Singapore being one of the few exceptions to this rule,' he explained. The average dividend yield of Reits in Singapore was 7.1 per cent last year, trailing behind South Korea's 8.79 per cent. However, Singapore is ahead of Hong Kong's average dividend yield of 5.58 per cent over the same period. Slow occupier demand and halting financial sector expansion have meant that further acquisition of local assets is likely to dilute the distribution yields of unit-holders. This has driven S-Reits to turn their sights towards retail, hotel and residential properties overseas instead.

 Sharing Wisdom (2nd March 2012) Approximately 38 per cent of S-Reit portfolios are situated outside of Singapore. Of this, China and India form the majority at 23 per cent and 19 per cent, respectively. This trend of overseas acquisitions is expected to continue for S-Reits in 2012 as they pursue expansion plans in the region, said CBRE in the report. However, they are likely to heed unitholder concerns and be more selective with the property they acquire, focusing mainly on yield-enhancing property assets. Asian Reits in general could also look beyond traditional sectors and domestic markets for diversification and greater yields, should their investment mandates permit. Source: The Business Times Connect with Wisdom Capital: Like our Facebook Page (http://ow.ly/9jhni) Follow us on Twitter (http://ow.ly/9jhr2) Visit our website (http://www.wisdomcapital.com.sg/)