Post-COVID 19 Recovery Play - Giant Retail & Office LandLords

Own cash-generative, monopoly-like assets

Frasers Centrepoint Trust (FCT) has proposed to acquire 5 new shopping malls. The merger between CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) would create the largest REIT in Singapore, CapitaLand Integrated Commercial Trust (CICT) by the end of 2020. Besides these 2 mega REITs, if one is also vested in Mapletree Commercial Trust (MCT), he/she would be well-positioned for the post-COVID recovery once the HarbourFront precinct is fully redeveloped. In fact, shoppers and diners have begun streaming back to the malls, especially on weekends. After witnessing the crowds, I am starting to question if the current recession is as bad as originally reported. The malls owned by FCT, CMT and MCT are conveniently located near MRT stations and large population catchment areas, thus ensuring high human footfall. They enjoy a monopolistic grip over strategically-located retail spaces in Singapore. As long as there is no second Circuit Breaker (fingers-crossed!), these 3 retail & commercial REITs are solid long-term recovery plays in my opinion. Huge dose of patience required. Collecting rental income from forty properties. FORTY!!!

"Landlords grow rich in their sleep"

~ John Stuart Mill~

Growth Catalysts For Suntec REIT In 2020

9 Penang Road is scheduled to be completed at the end of 2019. This Grade 'A' commercial building is 100% pre-leased to UBS. Suntec REIT holds a 30% stake in this development. 

21 Harris Street in Pyrmont is a tech and media hub 2km west of Sydney's CBD. Scheduled for completion in 1Q2020. Already 96.2% pre-leased. Anchored by Publicis Groupe. Other tenants include co-working operator Campfire, a childcare centre and a gym operator.

Olderfleet, at 477 Collins Street in Melbourne is scheduled for completion around mid-2020. Suntec REIT has a 50% interest in this development.

Suntec REIT will receive a full quarter of rental contribution from its latest acquisition of 55 Currie Street in the heart of Adelaide's CBD.

Commercial S-REITs Rate-Hike Sensitivity Data Comparison (4Q2016)

During bullish times, it is still important to keep a 'shopping list' for our portfolios. Even though valuations might be too high for us to deploy capital at the moment, we should continue to grow our investable funds (warchest) while waiting for opportunities during market dips. It is common knowledge that REITs is an asset class that is more sensitive to Fed rate hikes. With a widely-expected rate hike coming in June, we should get our 'shopping list' ready because those dips after rate hikes are usually short-lived.

Below is a short-list of blue-chip commercial S-REITs based on their latest quarterly results for your easy comparison. When the market dips come (and they will eventually), all of us can strike fast. Happy reading! :)


Mapletree Commercial Trust:
1. Gearing: 37%
2. Debt Maturity: 4.3 years
3. Debt Maturity Profile: No refinancing needs in FY16/17 & FY2017/2018
4. Interest Coverage: 4.9 times
5. All-in debt costs: 2.64% per annum
6. % of borrowings hedged on fixed rates: 81.2%
7. NAV: $1.34

Suntec REIT:
1. Gearing: 37.7%
2. Debt Maturity: 2.91 years
3. Debt Maturity Profile at the REIT level: 2017 (3.4%), 2018 (34%), 2018 (27.2%)
4. Interest Coverage: 4 times
5. All-in debt costs: 2.28%
6. % of borrowings hedged on fixed rates: 60%
7. NAV: $2.12

CapitaLand Commercial Trust:
1. Gearing: 37.8%
2. Debt Maturity: 3.2 years
3. Debt Maturity Profile: 2017 (5%), 2018 (16%), 2019 (21%), 2020 (38%), 2021 (15%)
4. Interest Coverage: 5.8 times
5. All-in debt costs: 2.6%
6. % of borrowings hedged on fixed rates: 80%
7. NAV: $1.78