S-REITs lag in May despite attractive yields, lower rates

FSTREI slides 1.6% despite a 2.5% gain in the STI.

Singapore-listed REITs underperformed in May, even as the sector remained supported by attractive yields and lower domestic interest rates, according to a UOB Kay Hian report.

The FTSE ST All-Share REITs Index fell 1.6% during the month, compared to a 2.5% gain in the Straits Times Index.

The yield on 10-year Singapore government bonds fell slightly to 2.06% in May, whilst US core inflation edged up to 3.3% in April, the brokerage said.

It added that REITs were actively recycling assets, helped by lower domestic interest rates. The sector offered a yield spread of 3.8%, above its long-term average.

Industrial and logistics REITs were amongst the better performers. AIMS APAC REIT rose 4.6%, Frasers Logistics & Commercial Trust gained 4.2%, and CapitaLand Ascendas REIT added 0.4%.

Citing The Business Times, UOB Kay Hian said Hongkong Land is evaluating a possible acquisition of Marina One, alongside other interested parties, including CapitaLand.

The mixed-use property, owned by M+S, is being marketed at about $5.7b. It has 1.88 million square feet of office space, 140,000 square feet of retail space, and residential units.

Another market development is the opening of Geneo, a $1.4b development at Singapore Science Park jointly owned by CapitaLand Development and CapitaLand Ascendas REIT. 

The life sciences and innovation site has committed occupancy of 81%, with tenants including A*STAR, Barry Callebaut, Chugai Pharmabody Research, Henkel, and NSG Bio.

Office leasing activity also continued, with Allianz reportedly taking up 78,000 square feet at the redeveloped Shaw Tower on Beach Road. 

The insurer is expected to move there after its lease at CapitaSky expires in March 2027, the brokerage said.