Singapore-Listed REITs Set for Secondary Fundraising Growth by 2025

Singapore-listed real estate investment trusts (S-REITs) have secured over $2.8 billion through equity fundraising in 2024, driven by notable acquisitions from CapitaLand Integrated Commercial Trust and Keppel DC REIT. These offerings have attracted strong investor interest.

The successful fundraising underscores the resilience and appeal of S-REITs as a preferred investment vehicle, particularly in a volatile economic environment. Analysts attribute this robust demand to the strategic acquisitions that enhance portfolio diversification and income stability. CapitaLand Integrated Commercial Trust’s acquisition of prime retail and office assets, alongside Keppel DC REIT’s expansion into high-demand data center markets, has further strengthened investor confidence. Moving forward, industry experts anticipate continued momentum in the sector, supported by favorable market conditions and growing interest in income-generating assets.

5 Largest S-REITs’ equity fundraising in 2024-to-date

Singapore-listed real estate investment trusts (S-REITs) have been more active in their equity fundraising (EFR) in 2024, with the total amount raised from private placements, and preferential offerings rebounding from levels seen a year ago.

As of Dec 13, at least six S-REITs have announced EFR exercises this year, raising over S$2.8 billion, including S$1.6 billion from private placements and S$1.1 billion from preferential offerings. This has exceeded the nearly S$1.9 billion in secondary fundraising by S-REITs in 2023, where activity was relatively muted amid the high-interest rate environment.

S-REITs have also been able to raise larger amounts of capital this year, with two S-REITs launching EFR exercises that raised over S$1 billion. Investors have also shown keen interest, with healthy subscription levels in most issuances.

Last month, Keppel DC REIT (KDCR) launched an EFR exercise, seeking to raise around S$1 billion, including S$600 million from a private placement and S$300 million from a preferential offering. It would also issue sponsor subscription units to raise S$85 million.

The proceeds would be used to fund KDCR’s proposed acquisition of two AI-ready hyperscale data centres in Singapore, which is expected to be accretive to distributions per unit (DPU).

The private placement was 4.0 times covered and the manager increased the size by S$100 million to S$700 million, resulting in the EFR increasing to around S$1.1 billion. The majority of the new private placement units were allocated to long-only investors and real estate specialists. Meanwhile, the preferential offering was also 159.9 per cent subscribed.

Elsewhere, CapitaLand Integrated Commercial Trust (CICT) also carried out a billion-dollar EFR this year, raising S$1.1 billion in September, comprising a S$350.3 million private placement and S$757.2 million preferential offering.

The proceeds were used to fund the acquisition of a 50 per cent interest in Ion Orchard and its connecting underpass, Ion Orchard Link, from its sponsor CapitaLand Investment. The private placement drew strong demand from new and existing institutional, accredited and other investors and was approximately 3.7 times covered. Its preferential offering was also 130.5 per cent subscribed.

Smaller EFRs by most other S-REITs this year have also seen healthy interest from investors.

Digital Core REIT announced a private placement in Feb seeking to issue new units at between US$0.60 and US$0.625 to raise gross proceeds of at least US$100 million. Most of the gross proceeds would be used to fund acquisitions. The private placement closed at the upper end of the price range, with the issuance also upsized to US$120 million.

Similarly, Parkway Life REIT’s S$180 million private placement in October to fund the acquisition of 11 nursing homes in France was oversubscribed, with strong demand from new and existing institutional and accredited investors.

With the pickup in S-REITs’ EFR and acquisition activities, coupled with robust investor interest for recent large issuances, the market would be closely watching for whether the momentum could continue into 2025. Sustained recovery in secondary market fundraising in 2025 could also pave the way for performance in the primary market.

DBS Group Research analysts said in a note this month that the S-REITs sector has seen a revival of acquisition deals. They predict that more S-REITs would tap the capital markets to fund acquisitions going into 2025, especially counters in the industrial and data-centre space, which are trading close to book value.

For more research and information on Singapore’s REIT sector, visit sgx.com/research-education/sectors for the SREITs & Property Trusts Chartbook.

Source : S-Reits’ secondary fundraising rebounds in 2024; more may tap capital markets next year