Industrial REITs test the waters overseas as supply woes escalate

Recent acquisitions were mostly made abroad.

Singapore’s industrial real estate investment trusts (REITs) are simply being lured by more profitable opportunities abroad compared to locally, as an increasing number of them are venturing abroad.

According to a report by UOB Kay Hian, these include Ascendas REIT’s (AREIT) S$1.01b acquisition of a portfolio of 26 freehold logistics properties across Australia and Mapletree Logistics Trust’s S$253.1m acquisition of a warehouse in Australia.

Additionally, Cache Logistics Trust has also recently announced its S$57.4m acquisition of its fifth Australian asset.

“Despite increasing competition in third-party acquisitions, 2013’s revision of government regulations stipulating a longer minimum occupation period (MOP) of five years, up from three years previously, will ensure stability of income streams as tenants are locked in for longer durations,” UOB Kay Hian said.

Meanwhile, occupancy pressures also haunt older developments of Industrial REITs, opening the door for tenants to shift to newer developments, UOB Kay Hian said.

“The shift offers opportunities for industrial REITs and asset owners to upgrade building specifications, subdivide space and offer upgraded space to new tenants at significantly higher rentals,” UOB Kay Hian added.