Singapore’s stock market is gaining popularity as a centre for real estate investment trusts.
The first REIT here appeared some time back in 2002. But even in recent years, Singapore has seen the listing of some huge billion-dollar REITs such as Frasers Logistics and Industrial Trust.
In this piece, I want to take a look at two of the largest REITs listed here in Singapore and compare them. Meet the contenders, CapitaLand Mall Trust and Ascendas Real Estate Investment Trust.
Asset class
The most obvious difference between the two REITs is their area of focus. CapitaLand Mall Trust, as its name suggests, focuses on retail properties (it dabbles a little in some commercial assets as well).
Ascendas REIT on the other hand, deals with industrial properties such as business & science parks, factories, data centres and more.
Going international
Another area of divergence between the two is their geographical focus.
Ascendas REIT has invested in overseas properties over the years and now has assets in China and Australia. It seems the trust would continue to pursue international investments going forward. Today, Australia and China contribute roughly 11% and 2%, respectively, to the REIT’s overall portfolio value. The rest comes from Singapore.
CapitaLand Mall Trust, on the other hand, only owns properties in Singapore. That said, it also has a 14.55% stake in CapitaLand Retail China Trust, which invests in retail properties in the Greater China region.
Both CapitaLand Mall Trust and CapitaLand Retail China Trust are sponsored by the local real estate giant CapitaLand Limited.
CapitaLand has stakes in other REITs and even private property funds that invest outside Singapore. This means that CapitaLand Mall Trust would most likely not invest directly in international markets since its sponsor would be heading any overseas venture.
A long history
Now, CapitaLand Mall Trust and Ascendas REIT do have things in common.
They mostly have assets located in Singapore; they have market capitalisations of around S$7.0 billion each; and they both were listed in 2002 and so have long histories of growth as a listed REIT.
Since their IPOs, CapitaLand Mall Trust and Ascendas REIT have generated total returns (where gains from reinvested dividends are factored in) of more than 420% and 554%, respectively.
Summary
Both Ascendas REIT and CapitaLand Mall Trust have proven themselves in the market by providing strong returns for their unitholders. But, the two trusts have significant differences related to their asset classes and growth strategies. This thus results in different risk profiles and that’s something investors would have to keep in mind.