Asian REIT markets saw continued recovery in 2009

Aside from acquisitions, Singapore REITS also saw surge in fundraising activity through rights issues and new units placement.

With overall improvement in Asia’s stock markets and easing of credit market conditions, Asian REITs saw continued recovery in 2009. The issuance of new shares and recovery in prices pushed Asian REITs’ total market capitalisation to rise 34.5% for 2009, according to CBRE Research Asia.

Particularly in Singapore, AMP Capital acquired a 19.2% stake in MacarthurCook Industrial REIT and a 50% holding in the REIT’s management company for S$54.1 million. Suntec REIT meanwhile raised gross proceeds of S$153 million at S$1.19 per unit, through the private placement of new shares, while Ascendas REIT raised S$301.6 million at S$1.63 per unit. CapitaMall Trust, on the other hand, completed a rights issue at S$0.82 each to raise a gross amount of S$1.23 billion in December.

Although REITs in Singapore and Hong Kong generally outperformed the overall stock market, the J- REIT Index fell 8.2% on factors including the strong yen and dilution through public offerings. Meanwhile weaker real estate fundamentals made a number of Asian REITs cut distribution payouts including Saizen REIT, which cut theirs due to credit problems.

Andrew Ness, Executive Director of CBRE Research Asia, said, “Further acquisitions are likely in the coming year as Asian REITs look to enhance their portfolio quality ahead of the full recovery of the real estate market. 2010 will probably see the resumption of the IPO market for REITs.” Added CBRE, Singaporean REITs are making better progress in returning to growth.