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Business Times
20-05-2025
- Business
- Business Times
RHB names its S-Reit top picks on softer interest cost pressures, minimal tariff impact
[SINGAPORE] RHB analysts maintained their 'overweight' call on Singapore-listed real estate investment trusts (S-Reits) amid 'softer interest cost pressures' – particularly for Singapore-centric Reits. This comes as most S-Reits under RHB's coverage report lower overall interest costs, as 'sharp falls' in domestic rates have benefited interest costs, said RHB analyst Vijay Natarajan in a Tuesday (May 20) research note. 'The majority (of S-Reits are) reporting lower overall interest costs. The fall in benchmark rates has also resulted in lower yields for alternative options (ie Treasury bills and Singapore savings bonds) and rising yield spreads for S-Reits – potentially creating room for fund inflows to the sector if the tariff overhang is removed,' he said. 'With benign sector valuations, we still see medium-term risk-rewards in favour of S-Reits,' he noted. Top picks include CapitaLand Integrated Commercial Trust (CICT) , CapitaLand Ascendas Reit (Clar) , Frasers Centrepoint Trust (FCT) , Keppel Reit , and Aims Apac Reit – all of which were assigned a 'buy' call. Cautiously positive guidance, strong operating numbers The majority of S-Reits under RHB's coverage reported in-line results with operational numbers remaining 'strong', Natarajan said. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'More than half of the S-Reits that reported financials... saw positive quarter-on-quarter and year-on-year net property income growth, supported by stable occupancy and positive rent reversions,' he said. A key positive was 'softer interest cost pressures', particularly for S-Reits focused on Singapore. There were no major changes to operational performance guidance, which is 'cautiously positive', as the direct impact of US tariff policies has been 'minimal' so far, while risks of uncertainties stemming from them remain clouded. Hence, a majority of the S-Reits under coverage foresee stable occupancy rates and positive rent reversions, barring certain overseas markets and segments. Singapore-centric Reits favoured to 'outperform' Among S-Reits, Natarajan thinks large-cap, high-quality Singapore-centric Reits could do well. In particular, he favours industrial, office, healthcare and suburban retail sub-sectors, while that of hospitality is the least preferred. 'Amidst a currently volatile macroeconomic backdrop, we expect Singapore-centric Reits to continue to relatively outperform and see larger fund inflows.' This comes as stable and supportive government policies post-election could create room for fiscal policy support in the event of an economic downturn, which is a positive for the real estate sector, Natarajan said. Noting that the three-month key benchmark Singapore overnight rate average has declined 70 basis points year to date, he adds that falling domestic interest rates are lowering Singapore-dollar denominated borrowing costs. 'Nearly three quarters of S-Reits saw flat to moderate interest cost declines quarter on quarter, with the largest declines seen among Singapore-centric S-Reits,' he said. 'In addition, most of the S-Reits also noted slight reductions in bank loan margins amid a flush of liquidity in the banking system.' Reits that logged the highest quarter-on-quarter interest cost declines include Far East Hospitality Trust (60 basis points), OUE Reit (50 basis points), Sasseur Reit (30 basis points), First Reit (30 basis points) and Acrophyte Hospitality Trust (30 basis points). Moreover, the stability of the Singapore dollar – benefiting from 'capital flight-to-safety' – and the Republic's growing financial hub status, could further benefit Singapore-centric Reits, he said.
Time Out
08-05-2025
- Time Out
NoMad Hotel by Hilton to open in Singapore with 15-storey waterfall, infinity pool and cliff-like facade
If you haven't already heard, Singapore's beloved Orchard area – crowned the coolest neighbourhood in Singapore for 2024 – is currently in the midst of a big revamp. Some telltale signs? The revival of monthly street bazaar Night at Orchard, new foodie mall Taste Orchard, and an upcoming live music and entertainment venue that's shaping up as we speak. And there's plenty more to come. Naturally, this puts more eyeballs on Orchard as a go-to place for hangouts and stays – both for locals and tourists. Hotels have been jumping onto the opportunity to grab a share of that prime land, with Artyzen, Pan Pacific Orchard, and most recently The Standard, Singapore, opening along the stretch. Soon to join the stylish line-up is Asia-Pacific's first-ever NoMad Hotel, a luxury lifestyle hotel brand under Hilton. Set to take over the current Faber House building at 230 Orchard Road, NoMad Hotel Singapore is said to have a nature-centric design, with features including a cascading 15-storey waterfall, and a lush cliff-like, botanical elements interwoven as part of its facade – bringing a literal breath of fresh air to the concrete jungle that it's set in. Of course, one cannot expect any less of WOHA Architects, the world-renowned firm behind the striking design concept of the hotel. The homegrown architecture company also also counts Punggol Digital District, 21 Carpenter, and Pan Pacific Orchard as some of its other projects, and the latter of the three even won a global Best Tall Building award last year. Housing a total of 173 guest rooms, NoMad Hotel at Orchard Road Singapore will have plenty of attractive facilities like an infinity pool, a sky terrace, events spaces, as well as in-house food and drink options – so it's safe to say that we can look forward to trying out some new restaurants and bars there in time to come. No matter which branch you're staying in, part of the whole NoMad Hotel experience is meant to provide guests with an experience that combines modernity with local elements, so expect lots of Singapore-centric touches here including works by local artists.
Business Times
06-05-2025
- Business
- Business Times
MPACT should sell Festival Walk or merge to get more Singapore-centric
SINGAPORE'S largest mall, VivoCity, with over a million square feet of lettable area, is much loved by shoppers. However, the mall's owner – Mapletree Pan Asia Commercial Trust (MPACT) – receives little affection from investors. In terms of trading price relative to book value, MPACT is performing the worst among the seven real estate investment trusts (Reits) that are members of the benchmark Straits Times Index (STI). As at May 6, MPACT, which owns properties owned primarily for office and/or retail purposes, traded at a 32 per cent discount to its end-March 2025 net asset value (NAV) per unit of S$1.78. In contrast, peers on the STI which own mainly office and/or retail properties – CapitaLand Integrated Commercial Trust (CICT) and Frasers Centrepoint Trust (FCT) – trade at around their latest reported NAV per unit. Both have much more Singapore-centric property portfolios than MPACT does. Perhaps, unitholders of Singapore-focused Mapletree Commercial Trust are ruing the aforesaid merging with Mapletree North Asia Commercial Trust, which owned properties in Hong Kong, China, Japan and South Korea, to form MPACT in 2022. Is MPACT's poor market valuation largely due to its ownership of Festival Walk in Hong Kong's Kowloon Tong? Maybe, the trust should aim to get better valuation from investors by turning much more Singapore-centric. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Festival Walk was valued at HK$23.8 billion, or around S$4.1 billion at end-March. The shopping and entertainment strip and VivoCity accounted for about 25.6 per cent and 24.2 per cent of MPACT's end-March property portfolio valuation, respectively. At end-Mar, VivoCity's valuation was up 14.8 per cent, but Festival Walk's fell 5.2 per cent in local currency terms from its level the year before. VivoCity, located in Singapore's HarbourFront area, is way more productive than Festival Walk – the former's net property income (NPI) for the financial year ended Mar 31 (FY2025) of S$176.6 million was 18.7 per cent higher than the latter's NPI of S$148.8 million. Amid a challenging environment for Hong Kong's retail landlords, tenant sales at Festival Walk fell 8.4 per cent year on year in FY2025. Rental reversion at Festival Walk was down 6.9 per cent, while VivoCity's climbed 16.8 per cent. Selling Festival Walk By selling Festival Walk, MPACT becomes much more Singapore-centric, which might help its unit price re-rate upwards. At end-March, Singapore assets accounted for 56.5 per cent of MPACT's property portfolio valuation of nearly S$16 billion, with the properties in Hong Kong, China, Japan and South Korea contributing the remainder. Excluding Festival Walk, the Singapore assets contribute about 75.9 per cent to the trust's end-March property valuation. Besides VivoCity, MPACT's other assets here are Mapletree Business City and mTower in the Alexandra area, and Bank of America HarbourFront in the HarbourFront area. However, can Festival Walk transact at or above its latest valuation? If needed, MPACT's sponsor Temasek-owned Mapletree Investments could buy Festival Walk at valuation. While acquiring Festival Walk may not be at the top of its agenda, Mapletree can show it is a strong sponsor who adds value to MPACT's unitholders by taking Festival Walk off the trust's hands. Showing that it is a strong sponsor will enhance Mapletree's credibility in property fund management. The Temasek-owned group is active in managing Singapore-listed Reits and private equity real estate funds that own assets across diverse geographies and property asset types. Moreover, as Mapletree is a major unitholder of MPACT, it gains from any improvement in the trust's trading price. Divesting Festival Walk not only makes MPACT more Singapore-centric, but also raises cash to potentially make additional acquisitions in Singapore. MPACT could possibly buy The Woodleigh Mall, in which Cuscaden Peak has ownership interest. Mapletree jointly owns Cuscaden Peak, alongside Temasek's CLA Real Estate. Over time, MPACT might eye buying Paragon along Orchard Road, after a potential major asset enhancement initiative. Cuscaden Peak will fully own Paragon after privatising Paragon Reit . Pursuing a merger Alternatively, MPACT could add scale and Singapore-centricity by merging with another trust. An MPACT- Suntec Reit merger can make sense. Suntec Reit owns properties that are used mainly for office and/or retail purposes in Singapore, Australia and UK, with a total valuation of S$11.8 billion at end-2024. The Singapore assets contributed about 78 per cent of the said valuation. As Suntec Reit trades at a larger discount to NAV than MPACT, Suntec Reit's unitholders may be happy to exchange units in it for units in a merged MPACT-Suntec Reit. Another possibility is for MPACT to merge with CICT, which owns about S$26 billion of properties as at end-2024 and has Singapore assets accounting for nearly 95 per cent of property valuation. A potential CICT-MPACT merger would enable MPACT's unitholders to hold units in a larger entity that is more Singapore-centric and likely to trade at a far superior multiple to book value than MPACT. Can Mapletree, which owns MPACT's manager, stomach possibly losing lucrative recurrent fund management income as part of this merger? Reits have been a major success story on the local bourse. For them to continue to win the confidence of investors, sponsors and managers, they need to pro-actively create unitholder value. MPACT has scale and a crown jewel in VivoCity. The mall's performance might improve further when ongoing major asset enhancements works are completed, possibly by end-2025. However, managing VivoCity well is not enough. MPACT's manager must urgently address the trust's poor equities market valuation. MPACT's manager should consider selling Festival Walk and/or a merger to help improve MPACT's unit price, thereby benefiting all unitholders. The writer owns units in MPACT
