2020- 2021

ASIA
REIT MARKETREPORT
July 2021

2020 - 2021 ASIA REIT MARKET REPORT / 1

TABLE OF CONTENTS
1.

Introduction / P3

2.

Key Takeaways / P4

3.

Analysis of Asia REITs Performance / P8

4.

Impact of COVID-19 on the Asia REIT Market / P17

5.

Asia REIT Market Highlights / P19

6.

Overview of Mainland China Quasi-REIT Market / P21

7.

Summary and Outlook / P23

2 / Cushman & Wakefield

1.

INTRODUCTION
As at the end of 2020 there were 185 REITs in the Asia market,of which 78 were integrated REITs containing multiple property
types. Twenty-eight REITs were focused on the office market,
24 were in industrial/logistics properties, 23 were in retail, 18
in the hotel sector, nine in residential apartments, and four inhealthcare. A single REIT focused on the data center market.
This report uses annual financial reports published by REITs
listed in Singapore, Japan and Hong Kong SAR. We have alsostudied Bloomberg data and have analyzed four financial
indicators: dividend yield, total return, price-to-book (P/B) ratio,
and leverage ratio. Together, we hope these insights will help
investors better understand the financial performance of REITs indifferent markets and in different property types.
In terms of average dividend yield, REITs in Singapore enjoyed
the highest returns at 6.4%, followed by Hong Kong SAR with
6.3%. REITs in Japan delivered the lowest yield of the three major
markets at 4.8%, consistent with historical performance.
When looking at total returns over the past ten years, Hong Kong
SAR REITs have delivered the highest total annualized returnrate, above the Singapore and Japan markets. Nonetheless, total
returns in most REIT markets were in negative territory in 2020,
although, of our three key markets, Singapore showed greater
resilience at -2.7%, compared to Hong Kong SAR at -13.0% andJapan at -13.1%.
In addition, REITs in Singapore and Hong Kong SAR presented
at an overall discount status, with an average P/B ratio of 0.96
and 0.60, respectively. Overall, REITs in Japan showed a slightpremium, with an average P/B ratio of 1.09.
Finally, REITs in the Singapore and Hong Kong SAR markets
demonstrate overall gearing prudence, with liabilities notexceeding 45% of the total asset value, while their counterpartsin Japan shoulder a relatively higher leverage ratio, although still
remaining at less than 55% of the total asset value.

2020 - 2021 ASIA REIT MARKET REPORT / 3

2.

KEY TAKEAWAYS
Repeated consolidation and merger activities in the Singaporean REIT
market have helped to establish its regional position and to improve
investment returns.

In January 2020, Ascott Residence Trust
completed its merger with Ascendas Hospitality
Trust, increasing the asset value of the listed
entity by 30% and making it the largest hotel trustin Asia, as well as one of the top 10 globally, witha market value of US$2.634 billion. Following themerger, Ascott Residence Trust was successfully
included in the FTSE EPRA Nareit Global
Developed Index in June 2020.

the largest REIT in Singapore and the second
largest in Asia, behind just the Link Real Estate
Investment Trust (Link REIT) in Hong Kong SAR.
The total value of properties managed by themerged entity rose to approximately S$22.4
billion. The strong combination will help attract
institutional investors to increase the valuation,
reduce the risk of over-concentration, andincrease debt space for greater M&A capability.

In April 2020, Frasers Logistics and Industrial
Trust and Frasers Commercial Trust completed
their merger, becoming the sixth largest REIT
on the Singapore Exchange, with a total market
value for the new listed entity of US$3.654 billion.

As the market matures, mergers between REITs
are likely to become a clear trend. Large trusts
tend to outperform smaller trusts in terms ofoperations and management, financing, and M&A
activities. REITs with smaller market values areseeking mergers to attract more institutional
investors. We believe it is clear that this wave of
M&A in trusts will continue. In addition, trusts thatcurrently have higher borrowing costs, and whichshare sponsors and trust managers, are also likely
to merge.

Most recently, in October 2020, CapitaLand
Mall Trust and CapitaLand Commercial Trustformally merged to form CapitaLand Integrated
Commercial Trust, with a total market value ofapproximately US$10.6 billion as at the end of
2020. The valuation makes the integrated trust

4 / Cushman & Wakefield

Real estate investment portfolios are strengthening through greater asset andgeographical diversification.

Mixed-use REITs involving multiple property
types remain the most numerous in the Asia
market. In general, asset management companies
seek to hedge against their investment risks byfurther diversifying their real estate investment
portfolios. In 2020, Link REIT, CapitaLand China
Trust, and Mapletree North Asia Commercial
Trust, all announced intentions to expand theirinvestment scope by diversifying their allocation
by geography and by asset category.
Hong Kong SAR’s Link REIT has continuallydeveloped its property mix since its IPO of 2005,
including by expanding its investment region from
Hong Kong SAR to first-tier cities in mainland
China, and even further afield to the international
market, by acquiring Grade A offices in Sydney
and London in early and mid-2020. It has alsoannounced an expansion of its investment
scope to allow investment in residential, hotel,
and serviced apartment properties to enhanceflexibility in its future investment choices.
When going public in 2013, Mapletree North Asia
Commercial Trust (MNACT) held an investment
strategy focused on commercial real estate inmainland China and in Hong Kong SAR. It entered

the Japanese market in 2018 to invest in officeassets in Tokyo, and then expanded its investment
scope further to South Korea in 2020 in order toacquire office assets in Seoul.
In November 2020, CapitaLand China Trustannounced its first foray into industrial park
projects by acquiring five industrial parks locatedin China. It also plans to expand its investment
asset category to cover diversified assets,
primarily for retail, office, and industrial uses,
including industrial parks, logistics facilities, data
centers, and mixed-use developments.
Overall, MNACT is the smallest REIT in termsof market value among the four REITs under
Mapletree Investments listed on the Singapore
Exchange, while the CapitaLand China Trustis under the CapitaLand umbrella, also with arelatively smaller market value. Both REITs haveshifted from their initial investment strategy at thetime of listing of focusing on a single trade format,
to a more diversified strategy. Both Mapletree’sand CapitaLand's expansions have also leveraged
the networks and project resources establishedby their sponsors early in the local market.

2020 - 2021 ASIA REIT MARKET REPORT / 5

REITs in industrial/logistics, office, and data center
sectors were more resilient during COVID-19.

The combined impact of COVID-19 containment measures and travel
restrictions was the biggest factor affecting earnings from REITs in 2020.
However, earnings from REITS in the industrial/logistics space demonstrated
greater resilience. With relatively rapid economic recovery in Asia and theongoing expansion of e-commerce demand, warehouse and logistics facilities
quickly resumed operations and maintained high occupancy rates andmoderate rental growth during the year. Within the region, industrial logistics
markets in mainland China and in Hong Kong SAR, Malaysia, and Vietnam
showed the highest risk tolerance.
In addition, Asia REIT acquisition deals in 2020 were mainly focused on
logistics, data center, and industrial park properties. Retail acquisitions
accounted for a smaller share in the investment market. Logistics REITs
demonstrated strong performance in terms of integrated earnings. As an
example, Mapletree Logistics Trust (MLT) recorded a total annualized return of
20.5% in 2020, compared to the average of -2.7% for Singaporean REITs.

REITs are expanding into data centers as an investment
hot spot.

The data center industry has experienced consistent growth with the riseof e-commerce and development of Internet industries and Big Data.
Consequently, data center property assets are attracting growing attention
from global real estate investment markets. In 2020, worldwide data center
REITs continued to show relatively strong earnings performance.
In the Asia market, the Keppel DC REIT, currently still the sole DC-focusedtrust, achieved an annualized total return of 38%, making it the highest
earning REIT on the Singapore stock exchange market. In addition, data center
properties are becoming increasingly favored by investors, as demonstrated
by the fact that Mapletree Industrial Trust, Keppel DC REIT, Mitsui Fudosan
Logistics Park, and Cromwell European REIT all acquired data center assets
in 2019-2020. It's now evident that an increasing number of REITs that wereoriginally focused on industrial logistics are now entering the data center
sector to achieve expansion in both market scale and profitability.

6 / Cushman & WakefieldRegulatory policy reforms are raising maximum leverage ratios in the wake ofthe pandemic.

As REITs markets in Singapore and Hong Kong
SAR further mature, regulators have madecorresponding adjustments to their regulatory
policies in response to market development
needs. In April 2020, the global COVID-19
pandemic prompted Singapore's REITs regulator
to actively adjust its policy response to enhance
the risk-resilience of S-REITs. The policies included
extending the timeline for REITs to distribute atleast 90% of their earnings, increasing the equity
issuance limit, and raising the maximum leverage
ratio from 45% to 50%.
In Hong Kong SAR, amendments by the Hong
Kong SAR Securities and Futures Commission
to the REIT Code came into effect in December
2020. These adjustments included permitting
REITs to invest in minority-owned properties,

raising the cap on investments in property
development projects to Gross Asset Value(GAV) from 10% to 25% where certain conditions
are met, and increasing the maximum allowable
leverage ratio from 45% to 50%.
Overall, the Singapore REITs market has
undergone eight framework adjustments from1999 to 2020, while the corresponding Hong
Kong SAR market has undergone five regulatory
reforms from 2005 to 2020. The direction of
the reforms in both cases is to provide greater
regulatory flexibility for REITs as their markets
progressively mature, seeking to enhance
active management from the asset side and tocontinuously enhance the legal framework andto protect the legitimate rights and interests ofinvestors.

2020 - 2021 ASIA REIT MARKET REPORT / 7

3.

ANALYSIS OF ASIA REITSPERFORMANCE
3.1 Development of Asia REIT Markets
Across Asia, REIT markets got off the ground
later than in the U.S. It was not until 2001 that thefirst Asia REIT was formally offered and listed inJapan. However, the market has developed rapidly
since then. Over the past ten years, the number ofAsia REITs has risen from 70 to 185, with market
value growing from US$41.2 billion to US$281.4
billion. With the exception of 2020, annual market
value growth has been recorded at 20%. REITs are
now available in nearly 10 countries or territories
across Asia, although Singapore, Hong Kong

SAR and Japan are the key players, together
accounting for 89% of the total market value
across Asia.
The total Asia REIT market value took a hit in2020 due to the impact of COVID-19, falling
approximately 5% y-o-y to record US$281.4 billion.
This was the first decline since 2015, although thedrop was less severe than that seen during the
global financial crisis of 2008.

Fig 1 Asia REITs Development Timeline
3,500

Market Value of REITs in Asia

2019
The first REIT in
India went public.

US$100 million

3,000
2,500
2,000
1,500
1,000
500

2001
The first
two REITs in
Japan were
issued on theTokyo Stock
Exchange.

0

2005
The first
REITs in Hong
Kong SAR,
Malaysia andTaiwan went
public.

2011
The first REIT
in South Korea
went public
Under the impact of the 2008 financial crisis,
the overall market value of REITs in Asia fell.

2002
Singapore's first REIT, CapitaMall Trust (CMT)
was listed.
Source: Bloomberg Database, compiled by C&W Valuation and Advisory Services

8 / Cushman & Wakefield

Under theimpact of
COVID-19 in
2020, theoverall market
value of
REITs in Asia
dropped.

Taiwan
2%South Korea
Thailand1%
3%
Malaysia2%

Fig 2
Share of REITs Value on Major
Asia Stock Exchange Markets

Hong Kong SAR
11%
Japan
49%

Source: Bloomberg's database,compiled by C&W Valuation &Advisory Services

Singapore29%

Table 1 Aggregate Market Value of REITs in Asia
Number*

USD100 million

Percentage

Japan

62

1,393.7

49.5%

Singapore

42

814.0

28.9%

Hong Kong SAR

11

304.2

10.8%

Thailand

31

82.9

2.9%

India

2

70.6

2.5%

Malaysia

17

66.1

2.3%

Taiwan, China

7

44.8

1.6%

South Korea

13

37.2

1.3%

Total

185

2,813.5

100.0%*refers to the number of REITs listed on the exchange for each of the eight markets listed.
Source: Bloomberg's database, compiled by C&W Valuation & Advisory Services

2020 - 2021 ASIA REIT MARKET REPORT / 9

3.2 Asia REITs Dividend
Yield Analysis
In this report we define dividend
yield as the ratio of dividends
for the past 12 months (total
dividends for the past year)
to the stock market price of
REITs (price as of Dec. 31,
2020). Relative to stock price,
Singapore REITs have thehighest dividend distribution
rate, followed by Hong Kong
SAR and Japan. The dividend
yield of REITs in Singapore is6.4%, six basis points higher
than in Hong Kong SAR and 1.6
percentage points higher thanin Japan.
The dividend yield of REITs issensitive to government bondinterest rate changes. Comparedwith the same period last year,
the interest rates of ten-year
government bonds in Hong
Kong SAR and Singapore fell inline with looser global financial
policies, while Japan has longretained zero or even negativeinterest rates, indicating that
financial institutions maintaina long-term cautious attitude
towards the future market.
The interest rate spread of thedividend yield of REITs relative
to government bonds is higher
than that of the same period
last year, while the average

10 / Cushman & Wakefield

Fig 3
Comparison of Dividend Yield—REITs vs. 10-year
Government Bonds
6.3%

6.4%

4.8%
5.6%

5.5%

4.7%
0.8%

0.8%
0.02%

Hong Kong SAR
Dividend Yield—REITs

SingaporeJapan

10-year Government Bonds

Source: Bloomberg Database, Hong Kong SAR Exchanges website, SGX
website and Tokyo Stock Exchange website, compiled by C&W Valuation
and Advisory Services

spread for the three regions isaround 5%, up around 1% on thesame period last year.
Dividend yield is an important
return metric for REIT holders,
but high or low dividend yieldalone does not represent total
net earnings for an individual
REIT. For example, in Hong
Kong SAR, the Regal REIT
(Hotel) enjoys one of thehighest dividend yields, up
to 8.8%, but its market priceper fund unit has dropped bymore than 49% since it waslisted in 2011. In contrast, Link
Real Estate Investment Trust(Integrated) has a relatively low
dividend yield at 4.1%, yet its
market price per fund unit has
risen six-fold since its listing in
2005. In Singapore, First REIT
(Healthcare) offers the highest
dividend yield, at up to 20%, but
its market price per fund unit
plummeted more than 80% in
2020. At the other end of thescale, Keppel DC REIT (DataCenter) has the lowest dividend
yield at just 2.7%, yet its market
price per fund unit soared by
35% in 2020 alone.

Dividend Yield by Property TypeIn Hong Kong SAR, retail REITs offer the highest
distributions among all property types, with anaverage dividend yield of 6.7%. In Singapore,with the exception of First REIT, office properties
deliver the highest dividend yields, with anaverage dividend yield of 6.8%. However, In
Japan, hotel assets deliver the highest dividend
yield at 6.1%, while dividend yields from otherproperty types lag those of Hong Kong SAR and
Singapore.

Retail and hotel REITs have enjoyed relatively
high dividend yields chiefly due to their steep
falls in stock prices. The impact of COVID-19 has
made clear that REITs, as listed financial assets,
can suffer far greater exposure to instant trading
activities when compared with physical realestate. Market panic stoked by the pandemic
caused stock prices to fall more sharply than NAV,
while REITs needing to issue negative guidance
endured even more rapid and dramatic pricemovements. For example, the dividend yield ofFirst REIT rose to as high as 20% as result of astock price fall of nearly 80% during the year.

Fig 4
Dividend Yield Return by Property Types
14%
12.1%

12%
10%
8%
6%

6.5%
6.4%
5.2%

6.2%

6.8%

6.7%
6.1%
5.0%

4.8%

6.1%
5.5%
5.4%

3.5%

4%

4.7%
4.3%

5.0%
2.7%

2%
0%

Mixed
综合Use

Industrial/
工业/物流
Logistics

Office办公

Retail零售Hong Kong SAR

Hotel
酒店
Singapore

Multifamily
Healthcare
Data
公寓
医疗健康
数据中心
centerJapan

Note: The higher dividend yield of REITs (Medical health) is due to the larger decline in the stock price of First REIT.
Another REIT (Medical health) listed on the SGX, Parkway Life REIT, has a dividend yield of 3.5%.
Source: Bloomberg Database, Hong Kong SAR Exchanges website, SGX website and Tokyo Stock Exchange
website, compiled by C&W Valuation and Advisory Services

2020 - 2021 ASIA REIT MARKET REPORT / 11

Fig 5
Historical Average Dividend Yield
12%

9%

6%

3%

0%
2010

2011

2012

2013

2014

Hong Kong SAR

2015

2016

Singapore

2017

2018

2019

2020

Japan

Source: Bloomberg Database, compiled by C&W Valuation and Advisory Services

3.3 Asia REITs Total Return Analysis
Aside from the distribution yields examined above, the total return of a
REIT is a key income indicator for investors. The integrated earnings of
REITs consist of two components: the change in the stock price per fundunit, and the dividend. Looking at performance over the past five toten years, the annual total returns of REITs listed in Hong Kong SAR
have generally been higher than those in Singapore and Japan. For
example, the Link Real Estate Investment Trust (Integrated) has
achieved an annual return rate of 14% since it was listed in 2005,
by relying on its stock price performance alone.
However, in 2020, REITs listed in Singapore proved more
resilient to the impact of COVID-19 than their counterpartsin Hong Kong SAR and Japan. The overall average rateof return for REITs listed in Singapore was at -2.7%.
The five strongest performers were Keppel DC
REIT, Frasers Logistics Industrial Trust, Mapletree
Industrial Trust, Mapletree Logistics Trust, andParkway Life REIT. In contrast, in the same year,
the average total return for REITs listed in
Hong Kong SAR and Japan was recorded at
approximately -13% for both markets.

12 / Cushman & WakefieldTable 2 Annual Total Return of REITs Market by Region
Hong Kong SAR

Japan

Singapore

1 year (2020)-13.0%-13.1%-2.7%

3 years

-2.5%

6.7%

6.1%

5 years

7.1%

4.6%

10.7%

10 years

10.8%

8.9%

8.8%

Source: APREA

Table 3 The Annual Total return for REITs of Each Property type in Asia-Pacific Market
Mixed
Use

RetailOfficeHotel

Industrial/
Logistics

Apartment

Medicalhealth1 year (2020)-14.9%-15.5%-16.8%-23.9%

21.7%

-5.5%

-14.0%

3 years

5.7%

-0.3%

5.2%

-4.8%

17.2%

9.7%

1.1%

5 years

6.9%

3.7%

6.1%

0.1%

14.3%

8.6%

6.1%

10 years

10.4%

8.9%

8.7%

-

13.8%

11.6%

13.1%

Source: APREA

The impact of COVID-19 resulted in negative
total returns for all property type REITs in2020 save the industrial/logistics sector, which
received growing favorable investor attention andoutperformed the results of prior years.
In the long run, REITs will continue to bringinvestors considerable returns. The ten-year total
returns of industrial/logistics and healthcare
REITs have exceeded 13%, while total returns
from other property types are in the range of 8%10%. The uncertain global economic recovery has
meant that development in the hotel, office andcommercial property sectors remains challenging,while industrial and logistics property has
demonstrated strong capability for resilience.
Data centers remained the strongest REITs sector
in 2020. The Keppel DC REIT recorded a total
return of 38.4% for the year, marking it out as
the highest performing REIT for annual total
returns in Singapore. The Mapletree Industrial
Trust expanded the data center allocation in its
asset portfolio from 18% to 39%, in turn recording
a total return of 16% for the full year, and clearly
demonstrating the high degree of interest thatinvestors now hold in data center assets.

2020 - 2021 ASIA REIT MARKET REPORT / 13

Overall, REITs in Hong Kong SAR present at a discountstatus. Data shows that the average P/B ratio of REITs
in Hong Kong SAR was 0.91 as at IPO date, dropping
to 0.60 as at Dec. 31, 2020. In Singapore, average P/
B ratios have slipped from 1.01 at IPO to 0.96, while
REITS in Japan are in premium status territory with anaverage P/B ratio of 1.09.

1.25
1.00
0.75
0.50

0.60

香港
新加坡
日本
Source: Bloomberg Database, Hong Kong SAR
Exchanges website, SGX website and Tokyo
Stock Exchange website, compiled by C&W
Valuation and Advisory Services

In the Japan market, average P/B ratios are in a relatively narrower band among
sectors, ranging from the Industrial and Infrastructure REIT (Industrial) at 1.57 to
Ichigo Hotel REIT (Hotel) at 0.66.

P/B ratios for REITs can vary greatly by property type. The
impact of COVID-19 saw P/B ratios of retail and hotel
REITs drop sharply. In Singapore, data center REITs
lead the average P/B ratio table at 2.40, whilehotel REITS bring up the rear at 0.73. The
Japan REIT market operates in a narrower
average P/B ratio band, with industrial/
logistics REITs being the highest at 1.31
and hotel REITs the lowest at 0.89.
In Hong Kong SAR, hotel, retailand mixed-asset REITs all
trade at a discount status,with retail REITs having
the lowest average
P/B ratio at 0.48.

14 / Cushman & Wakefield

1.09

0.96

As at Dec. 31, 2020, REITs in Hong Kong SAR were generally trading at a discount.
Regal REIT (Hotel) had the lowest P/B ratio at 0.36. In Singapore the REIT withthe highest premium was Keppel DC REIT (Data Center), with a P/B ratio of 2.40,
while First REIT (Healthcare) offered the lowest P/B ratio of just 0.20.

P/B Ratio by Property Type

Japan

1.50

Singapore

We define P/B ratio as the ratio of the market priceper fund unit (the market price on Dec. 31, 2020) to
the net asset value per fund unit (the net asset value
per fund unit on Dec. 31, 2020). If the ratio is greaterthan one, it is at a premium, and if it is less than one, it
is at a discount.

Fig 6
P/B Ratio by Region
Hong Kong SAR

3.4 Asia REITs Price-to-Book Ratio Analysis

Fig 7
P/B Ratio by Property Type
3.0
2.40

2.5
2.0
1.5
1.0

1.04
0.96

1.17

1.31

0.81

0.82

0.62

1.05

1.03

0.48

0.5

1.18

1.10 1.15

0.89
0.73
0.58

0.0
综合
Mixed
Use

工业/物流
Industrial/

Logistics

办公
Office零售RetailHong Kong SAR

3.5 Asia REITs Leverage
Ratio Analysis
In this report, we define theleverage ratio as the ratio of
total liabilities to total assets. In
Hong Kong SAR, the leverage
ratio of REITs, directly or via
special purpose vehicle (SPV),
cannot exceed 50%. The Link
Real Estate Investment Trust(integrated) had a leverage ratioof just 18% as at Dec. 31, 2020,the lowest of all Hong Kong SAR
REITs, while Regal REIT (Hotel)
had the highest, at up to 43%.
Currently, the leverage ratioof REITs in Singapore is also
capped at 50% of the total
asset value. In April 2020,
the Monetary Authority ofSingapore (MAS) raised theleverage ratio from 45% to 50%,
without a prerequisite for an

酒店
Hotel

Singapore

公寓医疗健康
数 据Data
中心
Multifamily
Healthcare
center

Japan

Fig 8
Average REITs Leverage Ratio by Region

50%

44%

45%
40%

37%

35%
30%

28%

25%
20%
15%
10%
5%
0%
香港 SAR
Hong Kong

新加坡Singapore

日本
Japan

Source: Bloomberg Database, Hong Kong SAR Exchanges website, SGX
website and Tokyo Stock Exchange website, compiled by C&W Valuation
and Advisory Services

2020 - 2021 ASIA REIT MARKET REPORT / 15

interest coverage ratio of 2.5 (implementation
delayed until Jan. 1, 2022). As of Dec. 31, 2020,
the Singapore REIT with the highest leverage ratio
was ARA US Hospitality Trust (Hotel), reaching as
high as 43%, while Sasseur REIT (Retail) boasted
the lowest at 28%. But across Hong Kong SAR
and Singapore no REIT has a leverage ratio
exceeding 45%.
Unlike Hong Kong SAR and Singapore, Japan’s
authorities place no restrictions on REIT leverage
ratios, but do stipulate that REITs may only borrowfrom qualified institutional investors. As of Dec. 31,
2020, Nippon Accommodation REIT (Apartment)
had the highest leverage ratio, reaching up to52%, while Mitsubishi Estate Logistics (Industrial/
logistics) had the lowest at 29%.
Overall, the average leverage ratio of REITs in
Hong Kong SAR was at 28% as of Dec. 31, 2020,
compared to 37% in Singapore. The Singapore
figure was up slightly y-o-y due to factors
including a drop in market interest rates, lower

property valuations, and higher leverage ratio
limits. The leverage ratio of REITs in Japan overthe same period was at 44%, unchanged on 2019.
The total liability/total asset ratios of REITs in
Hong Kong SAR, Singapore and Japan are shownas shown in Figure 9 below.

Leverage Ratio by Property TypeIn terms of property type, in Japan, residential
apartment REITs have the highest averageleverage ratio at 50%, while industrial/logistics
REITs have the lowest at 40%. In Hong Kong
SAR, hotel REITs are the most highly geared at
42%, as opposed to retail REITs at only 22%. In
Singapore, REIT leverage ratios are quite evenly
balanced. Integrated and retail REITs are at 35%
and 36% respectively, while data center REITs
have increased their average leverage ratio from
29% in 2019 to 35% in 2020, due to continued
expansion.

Fig 9
Average REITs Leverage Ratio by Property Type
60%
50%

50%
40%
30%

44%
35%

44%
40%
37%

38%

42% 42% 43%
39%
36%

35%

48%

37%

35%

26%
22%

20%
10%
0%

Mixed
Industrial/综 合Use 工业/物流
Logistics

Office办
公

Retail零售Hong Kong SAR

Hotel
酒店
Singapore

Multifamily
Healthcare
公寓
医疗健康
数Data
据中心
centerJapan

Source: Bloomberg Database and SGX website, compiled by C&W Valuation and Advisory Services

16 / Cushman & Wakefield

4.

IMPACT OF COVID-19 ON THE
ASIA REIT MARKETAs the COVID-19 outbreak turned into aworldwide pandemic in March 2020, many
countries and regions in APAC, Europe and theAmericas adopted strict containment measures,
including social distancing and shutdown orders.
The economic impacts caused by such measures
have in turn brought a series of challenges toAsia REITs, in terms of operational, financial, andregional risks. We have explored Asia REITs’ risk
mitigation measures and resilience capacities
by studying the responses deployed by REIT
managers and governance authorities in thewake of COVID-19.
Following the cautious relaxation of pandemic
control measures, lease demand for residential
properties rebounded more quickly than for
office or retail properties. As a result, REIT
managers looked to launch asset enhancement
initiatives (AEI) to strengthen their property
portfolios values and to minimize potential loss.
They also took measures to cope with lease
surrender risks, such as offering rental subsidies
and converting vacant office floors in core areas
into co-working office spaces.

REITs focused on manufacturing, logistics anddata centers still experienced relatively highoccupancy rates and moderate rental growth intheir underlying assets, demonstrating strong
resilience capability. These trust managers
continued to expand the scale of their portfolios
by acquiring further assets. Despite a significant
overall reduction in asset acquisition in thefirst half of 2020, deal activity rebounded very
quickly in the second half of the year. Targeted
portfolio asset acquisition picked up throughthe period, including in logistics parks, industrial
parks, and data centers. REIT managers also
looked for geographical diversification in
preferred assets.
In contrast, hotel REITs were much more greatly
impacted by pandemic travel restrictions andconsequent collapses in inbound tourism
numbers. As a result, fund managers switched
their focus to assets offering relatively morestable cash flow, such as student housing.

2020 - 2021 ASIA REIT MARKET REPORT / 17

Additionally, larger trusts tend tobenefit from stronger operational
management than their smaller
counterparts, especially so in thecontext of the impact from thepandemic. The more powerful andresource-rich operators can boost
their REITs with investment projects tomaintain capital circulation, as well as
financial support measures. In contrast,
smaller REIT operators have much
weaker risk mitigation capacities,
exposing them to more severe survival
pressures and development challenges
during economic downturns, and in
holding weaker negotiating hands
when acquired by larger competitors.
In response to financial support
measures, both Hong Kong SAR and
Singapore raised their upper limits
on REIT leverage ratios in 2020.
Singapore also implemented policies

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to delay dividend payouts and raising
limits on stock issuance. In general,
Singapore went further than Hong
Kong SAR in carrying out adjustment
measures to their REIT market, andprovided more and multi-layered
support to help their market weather
the COVID-19 storm.
By relaxing cashflow requirements,
measures such as these afforded
REITs greater flexibility in managing
their cash flow, and assisted them toadjust capitals structure and reduce
financing costs to better meet the newchallenges arising from the pandemic.
Additionally, in the prevailing low
interest rate environment, morerelaxed financing restrictions havealso created more advantageousconditions for REITs to speed up theirpace of acquisition.

5.

ASIA REIT MARKETHIGHLIGHTS

Japan boasts the largest REIT market in Asia and the second largest globally.
During 2020, the Japanese REIT market numbered 62 listings with a total market
value of approximately US$139.4 billion – accounting for more than half of thetotal Asia REIT market. However, the market was down from its prior 64 listingsin 2019, with total market value dropping 8% y-o-y.
Japan
The Japanese REIT market was impacted by the double whammy of COVID-19
and the postponement of the Tokyo Olympics. The total REIT market stock
price fell by 9% in 2020 to drop below the Tokyo Stock Price Index (TOPIX),
suggesting a slower recovery than in the traditional stock market. In the second
half of the year, as a few J-REITs were included in the FTSE Global Stock Index,
overseas investors became the primary net buyers of J-REITs.

Singapore

The Singapore REITs market was active in 2020, supported by favorable
regulatory policies. Integration and merger activity was prominent, transaction
liquidity improved, and the share of overseas asset allocation rose. The two
REITs listed on the SGX in the year both focused on overseas markets, namely
Elite Commercial Trust (Office) and Hampshire United Real Estate Investment
Trust (Retail).
As of Dec. 31, 2020, the Singapore REIT market numbered 42 listed REITs andproperty trusts, with a total market value of approximately US$81.4 billion,
representing approximately 12% of the total market value of the Singapore stock
market. In December 2020, the S-REITs and property trusts contributed 29% of
the market’s daily turnover.
2020 - 2021 ASIA REIT MARKET REPORT / 19

The Hong Kong SAR REITs market faced challenges and also embraced reforms
in 2020. Overall REIT stock prices dropped by an average of 11%, pressured
both by the impact of COVID-19 and an environment of lingering social unrest.
The decline was steeper than the 5% fall in the overall stock market and wasaccompanied by reduced trading liquidity.
Hong Kong China
At the end of 2020 there were 11 REITs listed in Hong Kong SAR, with anaggregate market value of approximately US$30.4 billion. Kaiyuan Industrial
Trust (Hotel), which was listed in 2013, announced its privatization and delistingin January 2021. Jinmao Hotel Trust (Hotel) had also previously privatized anddelisted in October 2020. However, in May 2021, SF Real Estate Investment Trust(Logistics) went public, becoming the first logistics REIT to list on the Hong
Kong SAR Stock Exchange.

The India REITs market saw an excellent year for investment returns in 2020.
The two listed REITs as at Dec. 31, 2020 – Mindspace Office Park Real Estate
Investment Trust (Office) and Embassy Office Park Real Estate Investment Trust(Office) – had an combined market value of approximately US$7.1 billion.
India

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At the beginning of 2021, Brookfield India Real Estate Investment Trust (Office)announced its listing, to become the third REIT in the market. In addition, two
Infrastructure Investment Trusts (InvITs) were issued and listed, namely, IRB andIndiGrid, engaging in roads and power networks, respectively.

6.

OVERVIEW OF MAINLANDCHINA QUASI-REIT MARKET

By the close of 2020 a total of 284 realestate asset securitization products had beensuccessfully issued in mainland China, totaling
RMB598.55 billion. The collection comprised 93
quasi-REITs, 163 commercial mortgage-backed
security (CMBS) products, and 28 commercial
mortgage-backed note (CMBN) products. Of the
93 quasi-REITs, 18 have successfully exited, withthe remaining 75, with a total value of RMB137.78
billion, being traded on the Shenzhen andShanghai Stock Exchange markets and Inter-bank
Bond Market.
Twenty-three new quasi-REIT products werelisted on the market in 2020, totaling RMB39.15
billion, a drop-off in both number and value
compared with 2019. In the past three years, thequasi-REIT market has grown at a slower rate
than the CMBS market, with issuers prefer toraise funds via CMBS products due to the heavier
asset restructuring taxes and longer restructuring
processes involved with the construction of quasiREITs.
In March 2020, the first expandable quasi-REIT,
Cainiao-Zhonglian-CiticS-China Smart Logistic
Network Storage quasi-REIT (aka. Cainiao quasiREIT), was successfully issued for expansion at
RMB885 million. This marked a significant stride
forward in introducing expansion mechanisms forquasi-REITs. Following the first issuance of thequasi-REIT in 2019, and based on the underlying
assets of Cainiao storage projects in Chongqing’s
Liangjiang New Area, the Phase II expansion now
includes logistics project in Chengdu’s Shuangliu
district.
Asset value gains following the expansion ofCainiao quasi-REIT will be recorded under thesame private fund. Together with the original
asset portfolio, they will make up a new portfolioof underlying assets, creating cash flow that serves
as a source of reimbursement for quasi-REITs.
There is no difference in terms of the mandate for
ABS to provide reimbursement support or gaining
income or distribution from the asset pool. This
success in sustained injections of new assets
into Cainiao quasi-REIT yields a tangible productroadmap capable of driving the development ofpublic-traded REITs.
Furthermore, the shelf offering approach has
continued to provide highly efficient financing
channels for the quasi-REIT market. In 2020,
six REITs were issued via shelf offerings,
totaling RMB6.67 billion. The underlying assets
encompassed retail properties, logistics andstorage facilities, long-term leasing apartments,
and industrial plants. The IMIX Park shopping
mall, Shunfeng logistics and storage, and Huafa
rental apartment REIT projects all issued phase
III products in 2020 and successfully completed

2020 - 2021 ASIA REIT MARKET REPORT / 21their shelf offering series.
Two quasi-REIT projects were issued in 2020 with
underlying assets comprising domestic market
infrastructure. They were GSUM QingXi Bridge
quasi-REIT, valued at RMB4.705 billion, and the
ICBC Ruixin Investment China Energy Engineering
Investment Wind and Electric Power Green
Energy quasi-REIT, valued at RMB725 million.
Following the issuance of two highway quasi-REIT
products in 2019, asset sectors in the domestic
infrastructure REIT market were again expanded
by introducing road and bridge and wind power
generation facilities. The two new products haveprovided a lesson in innovation for the industry
on how to revitalize stock assets, widen socialized
financing channels, and promote the formationof closed-loop capital management, comprising
investment, financing, management and exit. They
also paved the way for further connections with
China’s public-traded infrastructure REITs market
into the future.
In September 2020, the Huaneng Trust Shimao
Hotel Property quasi-REIT was successfully
issued, valued at RMB650 million. The manager
is Huaneng Guicheng Trust Co. The underlying
assets are five-star hotels held by Shimao Group

22 / Cushman & Wakefieldin cities including Shaoxing and Wuhu. This is
the first quasi-REIT product to appoint a trust
company as the manager. Since the ABS and thetrust plan are under the same management, asset
operation efficiencies are improved while theissuer’s financing costs are reduced. To date, only
two trust companies have been approved by the
China Securities Regulatory Commission to carryout corporate asset securitization as the ABS
manager. The successful issuance of the Huaneng
Trust Shimao Hotel REIT creates a benchmark forother pilot projects where a trust company may
also play a role in a REIT.
Five quasi-REIT products successfully exited in2020. When compared with CMBS products,
quasi-REITs complete their asset restructuring
via asset transfer or the establishment of a new
project company in the issuance process. As aresult, quasi-REITs may exit through direct saleof the equity in the project company, and then
may be liquidated in the most efficient manner.
In December 2020, the Hengtai HongZe Huayuan
Yingdu Commercial quasi-REIT sold the Yingdu
Mansion Block D property in Beijing’s core
Zhongguancun district to GLP Capital. It was firstissued in January 2017, at RMB736 million, andwas the first quasi-REIT issued by China Securities
Internet System Co Ltd (InterOTC).

7.

SUMMARY AND OUTLOOK

1

As of Dec. 31, 2020, 185 active REITs were available in the Asia market, at a total
market value of US$281.4 billion, down approximately 5% y-on-y.

2

From highest to lowest for the three major markets, REIT distribution yieldrankings are Singapore first at 6.4%, followed by Hong Kong SAR at 6.3% andJapan at 4.8%.

3The interest rate spread of the distribution yield of REITs relative to government
bonds is up y-o-y, and the spread of the three regions averages at about 5%.

4

The ranking by leverage ratio, from highest to lowest, is Japan at 44%, Singapore
at 37% and Hong Kong SAR at 28%.

5

Total REIT return rankings in 2020, from highest to lowest, were Singapore at-2.7%, Hong Kong SAR at -13.0% and Japan at -13.1%.

6

Under the impact of COVID-19, industrial/logistic REITs in the Asia-Pacific market
showed the strongest resilience, recording a total return of 21.7% in 2020.

7

In the China quasi-REIT market, Cainiao quasi-REIT was successfully issued for
expansion, with a net worth of RMB885 million, achieving a major leap forward in
the introduction of the expansion mechanism for quasi-REITs.

8

Huaneng Guicheng Trust Co. became the first domestic trust company to act
as a manager of quasi-REITs with its Huaneng Trust-Shimao Hotel quasi-REIT
product.

9

By the end of 2020, a total of 36 infrastructure products, encompassing
industrial logistics, industrial parks, power generation, and highways had been
issued in China’s real estate securitization market.

10

In April 2020, the China Securities Regulatory Commission and the National
Development and Reform Commission jointly issued the Notice on Promoting
Real Estate Investment Trusts (REITs) in the Infrastructure Sector on a Pilot Basis,
providing a stable equity financing channel for investment in infrastructure realestate.

2020 - 2021 ASIA REIT MARKET REPORT / 23

CONTACT US

Feng Hu

James Shepherd

Senior Director
Valuation and Advisory Services
North Chinafeng.hu@cushwake.com

Head
Business Development Services
Greater China
james.shepherd@cushwake.com

Chris Yang

Catherine Chen

Director
Valuation and Advisory Services
North China
chris.z.yang@cushwake.com

Head
Capital Markets Research
Greater China
catherine.chen@cushwake.com

Rika Liu

Terry Chen

Director
Valuation and Advisory Services
North Chinarika.h.liu@cushwake.com

Associate Director
Valuation and Advisory Services
North China
terry.yx.chen@cushwake.com

EDITORIAL TEAM:
Simon Graham

Kate Zhang

Jerry Jusimon.graham@cushwake.com

keta.zhang@cushwake.com

jerry.ju@cushwake.com

Lexie Bi

Fiona Yanglexie.bi@cushwake.com

fiona.yang1@cushwake.com

About This Paper
This synopsis draws upon a comprehensive Chinese language research report, authored by the Valuations & Consulting Services Department of
Cushman & Wakefield, in conjunction with the Financial Committee of the China Real Estate Association. The report covers developments and financial
performance of the REIT market in select Asia territories for 2020, analyzes properties held by REITs in Singapore and Hong Kong SAR, and includes acase study of asset acquisitions and sales in the mainland China market. To access the full report please click Here.
This synopsis report was edited by Catherine Chen, Head of Capital Markets Research, Greater China; and Simon Graham, Editor, Business
Development Services, Greater China.

About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners.
Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries.
Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.
com or follow @CushWake on Twitter.

Disclaimer
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sources which Cushman & Wakefield believe to be reliable, but we have not verified such information and cannot guarantee that it is accurate andcomplete. No warranty or representation, express or implied, is made as to the accuracy or completeness of any of the information contained herein
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