04 May 2018
March Quarter Earnings of SGX’s Largest Office REITs
  • SGX’s four largest Office REITs with assets in Singapore – CapitaLand Commercial Trust, Suntec REIT, Keppel REIT and Frasers Commercial Trust – averaged a DPU of 2.09 cents for the March quarter. The fifth trust – OUE Commercial REIT – will release its 1QFY18 results next Thursday.
  • Singapore’s office market is recovering, CBRE data showed. 1Q 2018 office occupancy levels in the core CBD have improved QoQ, while average Grade A rents have continued their upward trend, supported by strong demand from the insurance as well as TMT sectors, CBRE noted.
  • The five largest Office REITs on SGX have a combined market cap of S$18 billion. In the 2018 YTD, they have averaged a total return of -3.2%, bringing their one-year and three-year total returns to 14.3% and 21.8% respectively. The five trusts maintain an average 5.6% distribution yield.

SGX lists 34 Real Estate Investment Trusts (REITs), three property trusts and six stapled trusts. The Global Industry Classification Standards (GICS®) classifies seven of these as Office REITs, including two pure-play US REITs and one European REIT. Office REITs are companies or trusts engaged in the acquisition, development, ownership, leasing, management and operation of office properties.


The five largest Office REITs with assets in Singapore are: CapitaLand Commercial Trust (CCT), Suntec REIT, Keppel REIT, Frasers Commercial Trust and OUE Commercial REIT. Note that GICS® classifies Suntec REIT as a Diversified REIT due to retail assets in its portfolio.


The five largest Office REITs on SGX have a combined market capitalisation of about S$18 billion. In the 2018 year-to-date, they have averaged a total return of -3.2%, bringing their one-year and three-year total returns to 14.3% and 21.8% respectively. The five trusts also maintain an average distribution yield of 5.6%.


The table below details the five largest Office REITs with assets in Singapore, sorted by market capitalisation. Click on the stock name to view its profile in StockFacts.



SGX Code

Market Cap S$M

3 May Closing Price

Total Return YTD %

12M Total Return %

3Y Total Return %

P/B (x)

Dvd Ind Yld %

GICS Sub Ind

CapitaLand Commercial Trust









Office REITs

Suntec REIT









Diversified REITs

Keppel REIT









Office REITs

Frasers Commercial Trust









Office REITs

OUE Commercial REIT









Office REITs









Source: Bloomberg & SGX StockFacts (Data as of 3 May 2018)


Geographical Spread


Note that the commercial assets owned by the five largest Office REITs are located both domestically and overseas – in Malaysia, Australia and the UK.


Apart from 10 office assets in Singapore, CCT owns a 17.7% stake in MRCB-Quill REIT, whose portfolio comprises 11 commercial properties across Malaysia. Suntec REIT’s Singapore portfolio comprises interests in seven commercial properties spanning the Central Business District (CBD), while in Australia, it has a wholly owned property in Sydney, and stakes in two commercial assets in Melbourne.


OUE Commercial REIT’s portfolio comprises three commercial properties in Singapore and Shanghai, while Frasers Commercial Trust’s (FCT) portfolio consists of seven office buildings and business park/space buildings in Singapore, Australia and the UK. Approximately 87% of Keppel REIT's office assets are in Singapore, with the remaining 13% located in Australia.


Last month, the four largest Office REITs – CCT, Suntec REIT, Keppel REIT, and FCT – reported earnings for the three months ended 31 March 2018. OUE Commercial REIT is scheduled to release its March quarter results next week, on 10 May 2018.


1Q Earnings Highlights 


For the first three months of 2018, the four trusts averaged a distribution per unit (DPU) of 2.09 Singapore cents, down an average 4.5% from the year-ago period. Suntec REIT reported the highest DPU of 2.43 Singapore cents among the four trusts, up 0.3% YoY, followed by FCT with a DPU of 2.40 Singapore cents, down 4.4% YoY. Suntec REIT was the only trust that posted a YoY percentage growth in DPU.


These trusts averaged a 3.4% YoY decline in net property income to S$48.5 million, while gross revenue fell an average 2.0% YoY to S$65.0 million.


On average, the four REITs had an aggregate leverage ratio of 37.1% as of the quarter ended 31 March 2018. This compares with an average of 36.8% in the three months ended 31 December 2017.


Keppel REIT and CCT had the highest aggregate leverage ratios of 38.6% and 37.9% respectively, while FCT had the lowest gearing of 35.3%. Interest cover for the four trusts averaged 4.3 times in the March quarter, versus 4.4 times in the December quarter.


March Quarter Financial Results 



Distribution per unit (Singapore cents)

YoY % change

Net Property Income (SS$ mln)

YoY % change

Gross Revenue (S$ mln)

YoY % change

CapitaLand Commercial Trust







Suntec REIT







Keppel REIT







Frasers Commercial Trust














~Property Income


^DPU comprises (1) advanced distribution of 0.80 cents for 1 Jan 2018 to 31 Jan 2018, which was paid out in cash on 12 Mar 2018, and (2) distribution of 1.60 cents for 1 Feb 2018 to 31 Mar 2018




Aggregate Leverage Ratio (%) as at 31 Mar 2018

Aggregate Leverage Ratio (%) as at 31 Dec 2017

Interest Coverage Ratio (x) as at 31 Mar 2018

Interest Coverage Ratio (x) as at 31 Dec 2017

CapitaLand Commercial Trust





Suntec REIT





Keppel REIT





Frasers Commercial Trust










Source: Company data


1Q 2018 Singapore Office Space 


On 27 April 2018, the Urban Redevelopment Authority (URA) released the real estate statistics for the first quarter of 2018. According to the report, prices of office space increased by 1.3% in the March quarter, compared with a 2.7% increase in the December quarter, while rentals of office space rose at the same pace as the previous quarter, by 2.6%.


As at the end of the first quarter, there was a total supply of about 791,000 sq m GFA of office space in the pipeline, compared with 597,000 sq m GFA in the pipeline in the previous quarter. The island-wide vacancy rate of office space declined to 12.5% at the end of the March quarter, from 12.6% at the end of the December quarter. Click here for the full release.


Improving Outlook


Office occupancy levels in Singapore’s core CBD improved to 94.1% in 1Q 2018 from 93.8% in 4Q 2017, with demand from the insurance and technology, media and telecom (TMT) sectors remaining strong during the quarter, Keppel REIT said in its 18 April results release, citing CBRE data. Average Grade A rents also continued their upward trend, increasing from $9.40 psf pm in 4Q 2017 to $9.70 psf pm in 1Q 2018, the data showed.


CBRE remains upbeat on the Singapore office market and has observed improving confidence among the traditional finance, energy and professional services sectors, which will lend support to a recovering office market, Keppel REIT noted.


Looking ahead, as challenges remain amidst a volatile macro environment, Keppel REIT’s Manager will continue to drive a stable portfolio performance through ongoing proactive tenant and lease management, so as to deliver sustainable distributable income to unitholders, it said. It will also maintain a prudent capital management strategy to optimise the REIT’s performance in a rising interest rate environment.


CCT also highlighted the steady uptrend in market rents in its 24 April 2018 results release, citing CBRE data. It noted that market rents are expected to grow steadily over the next few years, given higher committed occupancies in the newly completed office buildings and limited new supply in the CBD between 2018 and 2020.


“In relation to CCT, the potential rise in market rents will narrow the gap between committed and expiring rents for its leases due for renewal in 2018,” it added in the statement.


Did You Know?


Real Estate Investment Trusts (REITs) raise capital to purchase primarily real estate assets, usually established with a view to generating income for unit holders of the fund. This allows individual investors to access real property assets, and share the benefits and risks of owning a portfolio of properties, which typically distribute income at regular intervals through dividends.


The risks associated with a REIT investment vary, and include factors such as gearing ratios, refinancing costs, alignment of management fees, as well as geographical location and quality of the underlying assets in their portfolios. Other risks associated with stock investing (e.g. price risk, volatility and liquidity risks) also apply.

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