After two long years, we are finally seeing the light at the end of the tunnel.
Last Friday, Singapore announced that it will move to the next phase of living with the virus.
And with it, a raft of measures was either lifted or relaxed.
Among them was the doubling of group sizes from five to 10 when dining in and also for household visits.
The restriction on the sale of alcohol after 10:30 p.m. will also be lifted.
Not only will larger social gatherings be allowed, but a new Vaccinated Travel Framework (VTF) will lift more restrictions for travellers entering Singapore and allow Singaporeans to travel more easily.
It’s music to many businesses’ ears as these changes are expected to bring in additional business and encourage more social gatherings.
Here are three REITs that stand to benefit from the ease of restrictions.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns a portfolio of nine suburban retail malls in Singapore with assets under management (AUM) of S$6.1 billion as of 31 December 2021.
These include heartland malls such as White Sands, Causeway Point, and Changi City Point, with a total net lettable area of 2.3 million square feet.
With the increase in group sizes for dining in and gatherings, FCT’s malls should also enjoy higher footfall and tenant sales.
For fiscal 2020 (FY2020) ended 30 September 2020, the retail REIT saw its distribution per unit (DPU) dip to S$0.0942, down from the DPU of S$0.1207 recorded in FY2019.
However, by FY2021, FCT’s DPU had rebounded to S$0.12085, higher than its pre-COVID level.
Occupancy remained high at 97.2% while the average cost of debt remained low at 2.2%.
Shopper traffic stood at 66% of pre-COVID levels while tenant sales were higher by 6%.
These numbers showcase the REIT’s resilience as tenant sales remained healthy despite footfall being just two-thirds of pre-pandemic levels.
FCT is poised to report better footfall and tenant sales across its malls as restrictions ease, and investors can look forward to higher DPU.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, has a portfolio of 13 properties with a total of 3,143 hotel rooms and serviced residence units worth around S$2.6 billion as of 31 December 2021.
The REIT reported a resilient set of earnings for FY2021, with gross revenue flat year on year despite the pandemic.
Net property income (NPI) inched up 4.1% year on year to S$75.2 million while distribution per stapled security (DPSS) rose 9.1% year on year to S$0.0263.
Based on FEHT’s last traded unit price of S$0.64, the REIT’s trailing distribution yield stood at 4.1%.
The REIT reported a decline in occupancy from 85.1% in FY2020 to 79.4% in FY2021 for its hotel division due to ongoing restrictions.
Revenue per available room (RevPAR) also fell 21.1% year on year to S$56.
The new VTF will benefit the REIT by bringing in a larger number of tourists, thereby lifting both occupancy and RevPAR.
FEHT should see its numbers improving as more travellers make use of the new framework to enter Singapore in the coming months.
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT that owns 21 properties in Singapore and two in Frankfurt, Germany.
The REIT’s AUM stood at S$22.5 billion as of 31 December 2021.
For FY2021, CICT announced a 75.1% year on year surge in gross revenue to S$1.3 billion.
NPI jumped by 85.5% year on year to S$951 million.
The sharp increase was due to the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust to form CICT.
DPU rose nearly 20% year on year to S$0.104, giving the units a trailing distribution yield of 4.7%.
The increase in group size should benefit CICT’s malls such as Funan and Raffles City, while the influx of tourists should further boost footfall and tenant sales.
With Singapore allowing up to 75% of staff to return to their workplaces, CICT’s commercial portfolio should also see sustained leasing demand.
Retail and commercial occupancy rates remained healthy at 96.8% and 91.5%, respectively, as of 31 December 2021.
CICT also recently announced that it will acquire a 70% stake in a grade A office building, 79 Robinson Road, for S$1.26 billion.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
