Acquisition activities of industrial landlords eased by over 80%

Total amount of acquisitios dwindled to S$107m in 2Q12 from around S$678.2m  the previous quarter.

According to OCBC Investment Research, announced acquisitions appear to suggest that investment activities have moderated over the first two quarters. Specifically, acquisitions amounting to ~S$678.2m were announced in 1Q, but the figure dwindled to S$107.0m in 2Q.

OCBC said that the figure is consistent with its 2011 year-end strategy report that industrial REITs are likely to adopt a more cautious stance and be more selective on their acquisition plans, amid the market uncertainty.

However, OCBC reiterate that industrial REITs have the firepower to acquire, should the assets and valuations come in attractive.

Here's more from OCBC:

As of now, we hold our view that corporate actions may be skewed more towards smaller REITs, as bite-
size acquisitions may not be very meaningful for REITs with huge portfolio.

We also believe that REITs with strong sponsors may turn to overseas for acquisitions, as some of them had revealed that capital values in the local scene may be a tad too high.

Lastly, noting that theaggregate leverages of several REITs (e.g. AREIT, CACHE, and Sabana REIT) are set to increase after funding their committed acquisitions, we believe further acquisitions in the subsector may possibly involve a combination of debt and equity, or capital recycling though divestment
and redeployment of funds.