(Dec 2): Underpinned by a global hunt for yield, Singapore’s real estate investment trusts are having a bumper year in deal-making as well as fundraising. The mantra that bigger is better will continue to drive capital market activity in the sector, analysts say.
Singapore-listed REITs have forked out US$16.9 billion ($23.1 billion) to purchase assets this year, already triple the previous peak reached in 2014. The sector has also raised a record amount in follow-on share sales, riding an 18% gain in the FTSE Singapore REIT Index, which is more than four times the rise in the broad benchmark in the city-state.
The mergers and acquisitions have created some of the largest REITs in the region. The allure of being big: the entity would find it easier to get a place in global benchmarks and portfolios, raise funds for expansion and tackle competition. For those reasons, expanded companies are better investments for stock buyers.