- As noted in the Budget 2015 Singapore REIT tax concessions were renewed for another five years to the end of March 2020. This included the Foreign-Sourced Income Tax Exemption, Reduced Withholding Tax for Qualifying Non-Resident Non-Individual Unitholders and the Goods and Services Tax Concession. Only the stamp duty remission on transfer of Singapore assets has not been renewed.
- In 2015 year thus far, the 28 REITs and six stapled trusts have averaged a total return of 3.8%, following average total returns of 14.0% in 2014. As of yesterday’s close the three best performing REITs in 2015 in terms of price and dividends were Fortune REIT, Mapletree Greater China Commercial Trust and Mapletree Commercial Trust.
- During the Budget 2015 speech yesterday the Deputy Prime Minister noted that overall Singapore’s tax regime for REITs continues to remain competitive relative to those elsewhere in Asia and will help to anchor the sustainable growth of the Singapore REIT industry.
Real Estate Investment Trusts (REITs) are a portfolio product that allow investors to share in the income generated by the tenants of properties, while bearing some of the risks associated with property values and financing costs. Hence REITs, which have been listed in Singapore since 2002, provide an efficient way to include real estate in an investment portfolio.
Recent tax concession renewals
Singapore’s Budget 2015 extended REIT concessions for another five years through to the end of March 2020. The specific renews as outlined by the Inland Revenue Authority of Singapore (IRAS) were as follows:
- The package of income tax concessions for REITs will be extended till 31 March 2020. With the extension, the tax exemption on qualifying foreign-sourced income will apply so long as the overseas property is acquired by the REIT or its wholly-owned Singapore tax resident subsidiary company on or before 31 March 2020. The concessionary income tax rate of 10% for non-tax-resident non-individual investors will also continue until 31 March 2020. More information can be found on the IRAS overview of Budget 2015 tax change found here and in Annex A-6 of the Budget 2015 – found here
- The existing GST concession for listed REITs will be extended till 31 Mar 2020. In addition, to facilitate fundraising by the REITs and Registered Business Trusts through Special Purpose Vehicles (SPVs), the GST concession will be enhanced to allow these trusts to claim GST on expenses incurred to set up SPVs that are used solely to raise funds for the trusts, and the SPVs do not hold qualifying assets of the trusts directly or indirectly. These REITs and Registered Business Trusts will also be allowed to claim GST on the business expenses of such SPVs. More information on the GST concessions can be found here.
The stamp duty remission on transfer of Singapore assets has not been renewed. As noted in Annex A-6 of the Budget 2015 – found here, the stamp duty concessions were intended to enable the industry to acquire a critical mass of local assets, as a base from which the REITS can expand abroad. As this has been achieved, the concession will be allowed to lapse after 31 March 2015.
Recent REIT performance
In 2015 year thus far, the 28 REITs and six stapled trusts have averaged a total return of 3.8%, following average total returns of 14.0% in 2014. As of yesterday’s close the three best performing REITs in 2015 in terms of price and dividends were Fortune REIT, Mapletree Greater China Commercial Trust and Mapletree Commercial Trust.
| Company Name | SGX Code | Mkt Cap S$M | % Change - Dividend Adj. [12/31/2014-02/23/2015] | % Change - Dividend Adj. [1 Year] | Dividend Yield (%) |
| CapitaMall Trust | C38U | 7341.4 | 5.3 | 19.2 | 5.0 |
| Ascendas Real Estate Investment Trust | A17U | 5869.9 | 2.5 | 19.5 | 5.9 |
| CapitaCommercial Trust | C61U | 5245.1 | 3.7 | 31.4 | 4.8 |
| Suntec Real Estate Investment Trust | T82U | 4862.6 | 0.3 | 23.5 | 4.9 |
| Keppel REIT | K71U | 3907.6 | 1.0 | 14.1 | 5.0 |
| Mapletree Commercial Trust | N2IU | 3179.2 | 8.6 | 33.7 | 5.1 |
| Mapletree Logistics Trust | M44U | 3011.9 | 4.5 | 26.7 | 6.2 |
| Fortune Real Estate Investment Trust | F25U | 2838.5 | 14.1 | 52.0 | 4.8 |
| Mapletree Greater China Commercial Trust | RW0U | 2781.2 | 7.9 | 34.0 | 6.0 |
| Mapletree Industrial Trust | ME8U | 2685.6 | 6.2 | 24.6 | 6.8 |
| SPH REIT | SK6U | 2639.0 | 1.8 | 12.4 | 5.7 |
| Ascott Residence Trust | A68U | 1952.9 | 3.3 | 15.7 | 6.5 |
| Frasers Centrepoint Trust | J69U | 1841.5 | 7.5 | 22.6 | 5.6 |
| Starhill Global REIT | P40U | 1808.7 | 6.7 | 12.4 | 6.1 |
| CDL Hospitality Trusts | J85 | 1709.1 | 3.3 | 14.4 | 6.3 |
| Parkway Life Real Estate Investment Trust | C2PU | 1476.2 | 3.8 | 10.8 | 4.7 |
| Far East Hospitality Trust | Q5T | 1449.1 | 1.6 | 9.0 | 6.3 |
| CapitaRetail China Trust | AU8U | 1378.8 | 6.1 | 29.9 | 5.9 |
| Keppel DC REIT | AJBU | 1274.6 | 4.6 | - | - |
| OUE Hospitality Trust | SK7 | 1240.3 | 5.3 | 18.4 | 7.3 |
| Frasers Hospitality Trust | ACV | 1067.4 | 0.6 | - | - |
| Frasers Commercial Trust | ND8U | 1001.7 | 6.0 | 26.3 | 5.7 |
| First Real Estate Investment Trust | AW9U | 969.5 | 7.2 | 36.0 | 6.1 |
| Lippo Malls Indonesia Retail Trust | D5IU | 932.1 | 1.9 | -7.3 | 8.0 |
| Cache Logistics Trust | K2LU | 910.7 | 2.3 | 10.8 | 7.3 |
| AIMS AMP Capital Industrial REIT | O5RU | 905.1 | 4.1 | 12.3 | 7.3 |
| Cambridge Industrial Trust | J91U | 864.6 | 1.9 | 0.9 | 7.4 |
| Ascendas Hospitality Trust | Q1P | 768.4 | 1.5 | -0.1 | 8.0 |
| OUE Commercial Real Estate Investment Trust | TS0U | 693.6 | 2.3 | 6.7 | 7.1 |
| Sabana Shariah Compliant Industrial Real Estate Investment Trust | M1GU | 660.6 | -1.3 | -4.5 | 8.0 |
| Soilbuild Business Space REIT | SV3U | 656.7 | 3.9 | 13.0 | 7.7 |
| Viva Industrial Trust | T8B | 500.6 | 2.0 | 14.0 | 8.5 |
| IREIT Global | UD1U | 362.7 | -2.8 | - | - |
| Saizen Real Estate Investment Trust | T8JU | 241.1 | 2.5 | 2.3 | 7.5 |
| Average | 3.8 | 17.3 | 6.4 |
Source: S&P Capital IQ (Data as of 24 February 2015)
Fortune REIT
Fortune REIT is a real estate investment trust constituted by a trust deed entered into on 4 July 2003 made between ARA Asset Management (Fortune) Limited, as the manager of Fortune REIT, and HSBC Institutional Trust Services (Singapore) Limited, as the trustee of Fortune REIT. The trust was listed on 12 August 2003 on the Singapore Exchange Securities Trading Limited.
As of yesterday close, Fortune REIT’s unit price increased 81.9% from the IPO price of HKD 4.75. The trust trades for more than HKD 8.00 now.
On 21 January 2015, the Trust reported that Fortune REIT has achieved record-breaking results for FY2014, with total revenue and net property income surged by 25.7% and 25.1% year-on-year to HK$1,655.8 million and HK$1,161.2 million respectively, marking the strongest growth since 2006. The robust results were mainly accomplished through the diligent execution of its three core growth strategies: asset investment, asset management and asset enhancement (click here to view more).
Over the past nine years, Fortune REIT has paid dividends semi-annually. The most recent distribution was HKD 0.208 per unit that went ex-dividend on 3 February 2015.
Mapletree Greater China Commercial Trust
Mapletree Greater China Commercial Trust is a Singapore REIT which aims to invest, directly or indirectly, in a diversified portfolio of income-producing real estate in the Greater China region which is used primarily for commercial purposes, as well as real estate-related assets. The trust was listed on 7 March 2013 on the Singapore Exchange Securities Trading Limited.
As of yesterday close, Mapletree Greater China Commercial Trust’s unit price increased 10.8% from the IPO price of S$0.93.
Recently, the company announced the issuance of HK$550,000,000 2.80% fixed rate notes due 2020 under US$1,500,000,000 euro medium term securities programme. The proceeds arising from the issue of the Notes will be applied towards the refinancing of the existing borrowings of the trust (click here to view more).
Last year, the trust went ex-dividend on 25 April and 30 October, distributing 3.099 cents and 3.162 cents per unit respectively.
Mapletree Commercial Trust
Mapletree Commercial Trust is a Singapore-focused REIT established with the principal investment objective of investing on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets. The trust was listed on 27 April 2011 on the Singapore Exchange Securities Trading Limited.
As of yesterday close, the Mapletree Commercial Trust’s unit price increased 71.6% from the IPO price of S$0.88. The trust trades for more than S$1.50 now.
On 21 January 2015, the trust reported that the gross revenue for the third quarter period ended 31 December 2014, increased by 6.5% to S$72.9 million (click here to view more). As mentioned in their latest annual report, the performance of the REIT was underpinned by strong performance of the assets in its portfolio as well as proactive capital management.
Over the past three years, the trust paid dividends quarterly. The most recent distribution was 2.08 cents per unit that went ex-dividend on 27 January 2015.
