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Thursday, April 8, 2010

Better year ahead for Asian Reits: CBRE

THE Asian real estate investment trust (Reit) market picked up in the second half of last year and should continue to improve this year, said CB Richard Ellis (CBRE) in a report yesterday.

In particular, Reits in Singapore (S-Reits) look like they are making better progress in resuming growth, compared with their counterparts in the region.

This year could also bode well for new Reit listings. ‘2010 will probably see the resumption of the initial public offering (IPO) market for Reits,’ reckoned CBRE Research Asia executive director Andrew Ness.

In H2 2009, the total market capitalisation of Asian Reits rose 17.6 per cent, the property consultancy said. Most Reits in the region managed to emerge from the credit crisis relatively unscathed, having raised funds from rights issues or rolled over their debts.

But some Reit markets went through a greater shake-up than others. In Japan, consolidation became the order of the day as four cases of mergers took place. One of these involved the merger of Advance Residence Investment and Nippon Residential Investment, as the latter’s sponsor went bankrupt.

Reits in Singapore and Hong Kong managed to withstand the storm better, even outperforming the main stock indexes in their markets. Between July and December last year, the FTSE ST Reits Index rose some 38 per cent.

‘Generally well managed by professional managers, S-Reits are unlikely to go under,’ CBRE said. ‘While their price movements can be volatile, S-Reits are considered a fairly safe haven in the long term.’

Although stock market conditions in Asia improved in the second half of last year, they were not attractive enough for most sponsors to set up and list a Reit. Just four new real estate funds went public in Thailand, according to CBRE.

But listing activity could return this year – there could be several new S-Reit listings in the pipeline, CBRE said.

Cache Logistics Trust is one that is due to go public soon. ARA Asset Management partnered logistics firm CWT to set it up, and the authorities have given the nod for listing. The Reit will start with six properties worth about $730 million in its portfolio.

ARA also said in December last year that it is working with Regency Group to list a Syariah-compliant Reit in Singapore. The Reit could be listed in the second half of this year and could hold some $1 billion worth of properties, largely from the hospitality sector in Qatar.

The market has also been awaiting the IPO of a commercial Reit by Mapletree Investments. The Reit would hold VivoCity shopping mall, among other assets.

Besides Singapore, Thailand could see more property funds going public this year, CBRE said.

Meanwhile, existing Reits could focus on buying assets and growing distributable income. ‘Further acquisitions are likely in the coming year as Asian Reits look to enhance their portfolio quality ahead of the full recovery of the real estate market,’ Mr Ness said.

Already, some S-Reits have been building up their portfolios. Last month, for example, CapitaMall Trust agreed to buy Clarke Quay for $268 million, and Ascendas Reit said that it would buy three properties for $228.5 million.

Source : Business Times – 6 Mar 2010
Better year ahead for Asian Reits: CBRE

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