2021-2022

ASIA REIT
MARKET
INSIGHT2021-2022 Asia REIT Market Insight

TABLE
OF CONTENTS

CHAPTER 1OVERVIEW
OF ASIA REIT
MARKET

Chapter 1
Overview of Asia REIT Market

03

Chapter 2
Asia REIT Market Highlights

06

Chapter 3
Financial Performance Analysis

12

Conclusion and Outlook

20

Appendix
Case Study of Ascendas REIT

22

At the close of 2021 there were 198 REITs in Asia, with a
total market value of US$304.1 billion, up by 8.1% y-o-y.
The three largest REIT markets — Japan, Singapore, andHong Kong SAR — accounted for nearly 90% of the total
value of the Asia REIT market. Of the 198 REITs, 89 weremixed-use, containing multiple property types. Thirty
REITs were focused on the office market, 25 were inindustrial/logistics properties, 24 were in retail, 17 in the
hotel sector, seven in healthcare, and four in multifamily.
Two REITs focused on the data center market.
TABLE 1
MARKET VALUE OF REITS IN ASIA*
NumberMarketValue (US$billion)

Percentage

Japan

61

147.75

48.6%

Singapore

42

85.31

28.1%

Hong Kong, China

11

30.06

9.9%

Malaysia

18

9.25

3.0%

India

3

8.13

2.7%

Thailand

27

7.02

2.3%

Mainland China

11

6.86

2.3%

South Korea

18

6.23

2.0%

Taiwan, China

7

3.51

1.2%

Total

198

304.12100%

Source: Bloomberg’s database, compiled by Cushman & Wakefield Valuation& Advisory Services*Data as of Dec. 31, 2021

2 | CUSHMAN & WAKEFIELD

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2021-2022 Asia REIT Market Insight

FIGURE 1: Number of REITs by Property Type in Asia

100
90
80
70
60
50
40
30
20
10
0

89

30

25

24

17
7

Mixed Use

OfficeIndustrial

RetailHotel

4

Healthcare Apartment

Source: Bloomberg Database, compiled by Cushman & Wakefield Valuation &Advisory Services

The year 2021 also marked 20 years since theJapanese REIT (J-REIT) market was established in 2001. As a result of two decades ofdevelopment and improvement, both institutional and individual investors now havea high level of participation in J-REITs. Datashows that institutional investors are thedriving force of J-REIT investors, accounting
for the majority. As the largest Asian andsecond-largest global REIT market, Japan
offered 61 REITs with a total market value ofapproximately US$147.8 billion at the end of2021, accounting for 49% of the total market
value of Asia REITs. Supported by strong
performance from logistics and apartment
REITs, the J-REIT total market yen valuationrose 18% in 2021.
Singapore hosts the second largest REIT
market in Asia. The overall performance of
the Singapore REIT (S-REIT) market was
relatively stable in 2021, with market value
growing 5% y-o-y, having previously been
impacted by the COVID-19 pandemic during2020. As at Dec. 31, 2021, Singapore REITs
numbered 42, with a total market value ofapproximately US$85.3 billion, accountingfor 28% of the total Asia REIT market value.
Hong Kong SAR completes the top three
Asia REIT markets, with 11 active REITs
comprising a total market value of around4 | CUSHMAN & WAKEFIELD

2
Data
Center

US$30.1 billion as at the end of 2021. The Link
Real Estate Investment Trust (Link REIT) is
the dominant player, accounting for roughly
60% of the total market value. REIT market
performance fluctuated greatly during 2021,
with both opportunities and challenges
evident in Hong Kong SAR during the year.
Valued at US$8.13 billion, India’s REIT market
was the fifth largest in Asia as at the end of
2021. India’s commercial real estate space isfast evolving, with three listed REITs holding a portfolio of predominantly completed
office assets of approximately 72 million
sq ft. This constitutes about 11% of India’s
existing Grade A office inventory, with additional development underway in all three
REITs. These REIT portfolios enjoy a healthyoccupancy level in the range of 80%–90%,
despite the recent pandemic-induced
uncertainty that occupiers have exhibited in
making their office space decisions.

As the largest Asianand second-largest
global REIT market,
Japan offered 61 REITs
with a total market
value of approximately
US$147.8 billion at theend of 2021.

Last but not least, the first batch of infrastructure public REITs in mainland China
were listed on the Shanghai and Shenzhen
stock exchanges in June 2021, marking theofficial launch of the long-awaited pilots for
China’s public REITs. At present, there are
12 public REITs, covering industrial parks,
logistics, highways, and other infrastructure
projects.

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2021-2022 Asia REIT Market Insight

CHAPTER 2

ASIA REIT MARKETHIGHLIGHTSJAPAN

SINGAPORE

The benefits that J-REITs have brought to the market
have surpassed original expectations, including greater
market transparency, job opportunities for real estate
asset management professionals, enhanced compliance,and long-term index investment programs and ETF(Exchange Traded Fund) products for equity investors.
The J-REIT market has also acted as a buffer for the
direct property market. Its liquidity offers the Bank ofJapan (BoJ) a flexible and viable transmission channel
for its monetary policies. In fact, the BoJ introduced its
asset purchasing program on J-REIT stocks in its efforts
to stabilize the market during bouts of volatility. The BoJ
has been purchasing J-REITs since 2010 to help enablea looser monetary policy. In 2021, the BOJ maintained
the upper limit of annual purchase of J-REITs at ¥180
billion. As at Dec. 31, 2021, there were 20 J-REITs where
the BOJ held over 5% investment units, totaling morethan ¥670 billion. In addition, the GLP-REIT succeeded
in its first accelerated global offering to international andJapanese investors in 2021, raising a total fund value of¥28 billion (approximately US$250 million).

Two new REITs — Daiwa House Logistics Trust (DHLT)
and Digital Core REIT — were listed on the Singapore
Exchange (SGX) in 2021. DHLT is a REIT consisting solelyof Japan assets, with 14 logistics properties in the country. Digital Core REIT, the second data center REIT on the
SGX, was issued by Digital Realty, a global data center
operator, whose asset portfolio is primarily in North
America. Four of the ten listed properties are in the
Silicon Valley region in California.

6 | CUSHMAN & WAKEFIELDFirst REIT achieved a total return of 56.6% in 2021, thehighest return in the S-REIT market. In addition, FirstREIT announced an expansion strategy plan to acquire 12
nursing home assets in Japan at S$164 million.
In 2021, the S-REIT market saw active property acquisitions, with 24 S-REITs announcing acquisitions, for a
total market value of more than S$15.3 billion. New economy assets accounted for more than 60% of total S-REIT
M&A activity by consideration in 2021, including 28% forindustrial and logistics assets, 23% for data centers, and
11% for industrial parks. In addition, many of these are
overseas acquisitions, especially in the U.S. and Europe,
where the freehold tenure and typically longer leaseterms are more attractive to investors.

CUSHMAN & WAKEFIELD | 7

2021-2022 Asia REIT Market InsightHONG KONG SAR, CHINA
In fiscal year 2021–2022, a three-year funding
scheme was announced to provide subsidies
for REITs listed on the Hong Kong SAR stock
exchange that have a market value of at least
US$1.5 billion at IPO. The funding is capped
at HK$8 million per REIT, upon approval fromthe China Securities Regulatory Commission(CSRC). To develop the REITs market andstrengthen Hong Kong as a major fund-raising center, this initiative may drive more
REITs to go public on the Hong Kong SAR
stock exchange.
In addition, SF REIT, the first logistics REIT
listed in Hong Kong SAR, went public in May
2021. The listed portfolio comprised threelogistics assets, located in Hong Kong SAR,

Foshan, and Wuhu. Meanwhile, New Century
Real Estate Investment Trust (Hotel), which
was listed in 2013, announced its privatization and was delisted in April 2021.
Compared to other major markets in Asia,
the Hong Kong REIT market has a less diversified asset base, primarily holding traditional commercial assets such as shopping
malls, offices, and hotels. Fewer REITS focus
on new economy assets such as logistics anddata centers. In its report titled Revitalizing
the Hong Kong SAR REIT Market, the Hong
Kong Monetary Authority encourages arange of property categories to go public as
REITs on the Hong Kong SAR exchange.

INDIA
Brookfield REIT was listed in February 2021
with a fund-raise of US$520 million. The REIT
has a portfolio spread across Delhi NCR,
Mumbai, and Kolkata, and was oversubscribed by a factor of eight times. The REIT
acquired a further asset in Delhi NCR’s Noidaregion in December 2021 for approximately
US$520 million, financed through a combination of a preferential share issue and a property-level debt issue. This was in line with
the REIT’s growth strategy through accretive
acquisitions. In early 2022, Blackstone soldits 9.2% stake in the Mindspace Business
Parks REIT to Abu Dhabi Investment
Authority for US$240 million. The offloading was achieved through a bulk deal on thestock exchange at a 16% premium over the
IPO issue price as at August 2020.

8 | CUSHMAN & WAKEFIELD

Since the listing of the first REIT in India,
REIT regulations have become more investor-friendly and more flexible for REIT
sponsors. In early 2021, the finance ministry announced amendments to help REITs
to raise debt funds from foreign portfolio
investors. This will ease access to financefor REITs and augment funds in the realestate sector. Additionally, it was proposedthat dividend payments on REITs should be
exempted from tax deducted at source, apain point for many investors. In March 2021,
the Insurance Regulatory and Development
Authority of India allowed insurance firms toinvest in debt securities issued by REITs, in abid to enable more long-term funding for thereal estate sector. In late July, the Securities
and Exchange Board of India amended

REIT regulations and reduced the minimum
application value for REITs from US$670 to
the range of INR10,000–INR15,000 (approximately US$134 to US$201) with tradingin single-unit lots. The adjustments wereintended to increase investor participationand liquidity.
With three successful REIT listings and morein the pipeline, institutional participation in
office assets is set to grow. India’s top sevencities present a sizeable opportunity forinvestors, with a REIT-eligible inventory of
more than 220 million sq ft (in addition toexisting REIT and PE portfolios) available forinvestment. A growing interest in land-stage
opportunities also substantiates investor
confidence in the nation’s office market
growth story.

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2021-2022 Asia REIT Market Insight

Provision of an exit mechanism throughREITs is attracting active interest and participation from global institutional investors
in Indian real estate, including development assets. The India real estate space is
expected to see more REIT listings, withinvestors and developers preparing themselves to be REIT-ready. Blackstone Group isplanning to list the country’s first retail-led
REIT in the year ahead, and is integrating
its portfolio of mall properties across multiple cities. DLF Cyber City Developers Ltd,the joint venture between DLF and GIC of
Singapore, is planning its REIT listing withdeliberations underway on multiple aspects,
including corporate and capital structures.
Tata Realty and Infrastructure is planning tolist its commercial REIT in the next two to
three years and is scaling up its office assets
portfolio to monetize the same. More suchlistings in the commercial real estate space
will be instrumental in the evolution of theoffice space, including the introduction ofbest practices in business.

A growing interestin land-stage
opportunities also
substantiates investor
confidence in thenation’s office market
growth story.

MAINLAND CHINA
China started to explore the REIT system
in year 2000. From 2014, when the firstquasi-REIT product, CITIC Qihang, wassuccessfully launched, to 2021, when thefirst batch of public infrastructure REITs
were successfully listed on the Shanghai and
Shenzhen stock exchanges, it has been along journey for China’s REIT development.
However, compared to the most developed
global countries and markets, China’s public
REITs are still in their infancy. In terms ofthe current proportion of market value of
public REITs in stock capitalization, China is
at 0.05%, markedly lower than Singapore at
13%, the United States at 3%, and Japan at 2%.
As at March 31, 2022, 11 public infrastructure REITs had been successfully listed inmainland China, marking a crucial step forthe nation’s REIT market. The opening up of
public infrastructure REITs provided equity
financing channels for domestic infrastructure holders, with active transactions in thesecondary market indicating the market’s
recognition of these products. While paying

10 | CUSHMAN & WAKEFIELD

heed to the performance of the public REITs
secondary market, we should also notethe operation of the underlying assets ofthe products, which would help investors
make reasonable decisions. On the whole,
the stock prices of public REITs in mainland
China held a greater premium than the offering prices.
The total market value of issued public infrastructure REITs in China was RMB44.1 billion
as of March 31, 2022, up 29% over the offering price (the average rise from the offering
price in the prospectus of each REIT to theclosing price on March 31). The average daily
turnover rate (value traded/total value offloating shares) of the 11 issued infrastructure
REITs was 2.07%, much higher than the turnover rate (0.24%) of the Hong Kong-listed
Link Real Estate Investment Trust during thesame period and the one-year daily turnover rate (0.25%) of the Singapore market
as a whole, showing the strong liquidity of
China’s REIT secondary market.

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2021-2022 Asia REIT Market Insight

3.1 GEARING RATIOCHAPTER 3

FINANCIALPERFORMANCEANALYSIS

In this report, we define the gearing ratio
as the ratio of total liabilities to total assets.
Currently, the gearing ratio of REITs in Hong
Kong SAR and in Singapore is capped at 50%of the total asset value, directly or via special
purpose vehicles (SPV). Japan’s authorities
place no restrictions on REIT gearing ratios,
but stipulate that REITs may only borrowfrom qualified institutional investors.

This section focuses on financial analysis of
REIT markets in Japan, Singapore, and Hong
Kong SAR. The report uses the four financial
indicators of gearing ratio, dividend yield,
total return, and price-to-book (P/B) ratio,
while also referring to the annual financial
reports published by REITs listed in Japan,
Singapore, and Hong Kong SAR, combinedwith Bloomberg data.

Despite Hong Kong SAR and Singapore
having eased policy restrictions on REIT
gearing ratios, average gearing ratios in
the two markets at the end of 2021 tended

to be flat compared to the same period in
the previous year, indicating that managers were cautious about increases in REITs’
borrowing levels. The average gearing ratioof REITs in Japan was 44% as of Dec. 2021,
compared to 37% in Singapore, which was
unchanged from 2020. The average gearing
ratio of REITs in Hong Kong SAR over thesame period was at 27%, slightly down by
1 percentage point from the prior year. The
total liability/total asset ratios of REITs in
Japan, Singapore and Hong Kong SAR are
shown in the chart below.

FIGURE 3: Average REITs Gearing Ratio by Region
50%
45%

FIGURE 2: Number of REITs by Property Type in Japan, Singapore, and Hong Kong SAR
30

44%

40%

37%

35%

27

30%

25

27%

25%
20

20%
15

15%
11

10

10

9

8

10%

8

6
5

4

6
3

3
1

5

2

5%

5
2

1

1

2

Japan

0
Mixed Use

OfficeIndustrial
Japan

RetailSingapore

Hotel

Healthcare

Hong Kong SAR

Source: Bloomberg Database, compiled by Cushman & Wakefield Valuation & Advisory Services
12 | CUSHMAN & WAKEFIELD

Apartment0%Singapore

Hong Kong SAR

Data Center
Source: Bloomberg Database, Hong Kong SAR Exchanges website, SGX website and Tokyo Stock Exchange website, compiled
by Cushman & Wakefield Valuation and Advisory Services
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2021-2022 Asia REIT Market Insight

3.2 DIVIDEND YIELDDividend by Property typeIn this report we define dividend yield as
the ratio of dividends for the past 12 months(total dividends for the past year) to thestock market price of REITs (price as of Dec.
31, 2021).

major Asian REITs markets all rose in 2021.
As at Dec. 31, 2021, the average spread forthe three regions was around 4.6%, lower
than at the same period in 2020.

The dividend yield of REITs in Japan wasapproximately 3.8% in Dec 2021, 1.0 percentage point lower than 2020, while that ofSingapore was approximately 6.1%, registering a fall of 0.3 percentage points from2020. Hong Kong SAR REITs delivered thedividend distribution rate at 7.1%, 80 bps
higher than 2020.
REITs possess features of both “equity” and“bond”, and the dividend yield reflects the“bond” feature. Therefore, the dividend yieldof REITs is sensitive to government bondinterest rate changes. The interest rates often-year government bonds in the three

Analysis of dividend yields alone is not
sufficient to determine the overall performance and integrated earnings of a REIT.
Sometimes, REITs with higher dividend
yields may have challenges, such as insufficient growth or volatile performance, requiring them and need to compensate for highvolatility in share price with higher dividends.
Conversely, REITs with lower dividend yields
may not necessarily perform badly, andcould have the potential for high growth or
soaring stock prices. As a result, investors
need to weigh both dividend income andcapital gains, but dividend income is generally less volatile compared to capital gain.

FIGURE 4: Comparison of Dividend Yield: REITs vs. 10-Year Government Bonds
8.0%
7.1%
7.0%
6.1%
6.0%
5.0%

5.7 pp
4.4 pp

4.0%

3.8%

3.0%
2.0%

1.7%

1.4%

3.7 pp

1.0%
0.07%
0.0%
Hong Kong SAR

Singapore
Dividend Yield

In terms of dividend yields by property type,industrial/logistics, multifamily, healthcare
and data center REITs experienced relatively
low dividend yields in 2021, chiefly due to thestrong stock performance of these assets,
which are favored by investors. Meanwhile,
mixed-use, office and retail REITs have delivered relatively high dividend yields, mainly
due to weaker stock performance in thewake of COVID-19.
In Hong Kong SAR, the sole hotel REIT
(Regal REIT) offered the highest distributions among all property types, with anaverage dividend yield of 8.0%. In 2021, dividend yields from all property types in Hong
Kong SAR outperformed those of Japan andSingapore, largely due to weaker growth in
the stock price.
As Singapore pursued pandemic control
measures such as working from home andreduced social gatherings in 2021, office andretail REITs were both impacted, with stock
prices plummeting, while dividend yields
rose to 7.4% and 7.2% respectively, up by 60
and 110 bps y-o-y.
In Japan, retail REITs enjoyed the highest dividend yields at 4.6%, while hotel
REITs record the lowest dividend yields
at 1.9% (6.1% in 2020). The major sponsor of Japan Hotel REIT Investment Corp,
SC Capital Partners, is optimistic about
Japan’s tourism industry recovery oncethe pandemic ends. Research shows thatwhile Japanese hotel revenues have fallen

sharply, in many cases potential property
values have not seen significant declines(in relation to rental declines). For example,
according to The Business Times, the valuation of a Kyoto hotel owned by Invincible
Investment Corp fell by about 15%, but thehotel’s average revenue per saleable room
dropped by 82% in 2021. According to theTokyo Stock Exchange, the dividend yieldsof the six Japanese hotel REITs in 2021
revealed remarkable differences, ranging
from the lowest of 0.61% to the highest of
4.3%, partially because of tenant arrangements, either lease contract or management
contract. REITs in Japan generally have lower
dividend yields than those in Hong Kongand Singapore, except for healthcare REITs,
which are slightly higher than Singapore.

In 2021, dividend
yields from allproperty types inHong Kong SAR
outperformed
those of Japan andSingapore, largely
due to weaker growthin the stock price.

Japan

10-year Bond Rate

Source: Bloomberg Database, Hong Kong SAR Exchanges website, SGX website and Tokyo Stock Exchange website, compiled
by Cushman & Wakefield Valuation and Advisory Services. Data as of Dec. 31, 2021

14 | CUSHMAN & WAKEFIELD

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2021-2022 Asia REIT Market Insight

3.3 TOTAL RETURN

FIGURE 5: Dividend Yield Return by Property Types
9.0%
8.0%

8.0%

7.4%

7.4%

7.2%

7.2%

7.0%

7.0%

6.2%
5.7%

6.0%
5.0%

4.5%

5.4%
4.6%

4.4%

4.0%

4.4%
3.7%

3.5%

3.3%

4.4%

REITs in the Asia market largely recoveredin 2021, and the annualized total return
rate of REITs of each property type turned
from negative to positive (except for industrial/logistics, which remained positive

3.6%

3.0%
1.9%

2.0%

Aside from the distribution yields mentioned
above, the total return of a REIT is a key
income indicator for investors. REIT investors
enjoy investment returns by holding equity
shares (fund shares) of the asset portfolio,
and the integrated earnings of REITs consistof two components: the change in the stock
price per fund unit, and the dividend.

1.0%

TABLE 2
Annualized Total Return of REITs
Market by Region
Hong
Kong SAR

Japan

Singapore

1 year

12.4%

20.1%

5.5%

3 years

1.0%

9.4%

8.8%

5 years

6.2%

6.3%

10.1%

10 years

12.6%

13.8%

10.6%

Source: APREA (based on a selected number of REITs
in each market)

0.0%
Mixed Use

OfficeIndustrial
Japan

RetailHotelSingapore

Apartment

Healthcare

Data Center

Hong Kong SAR

TABLE 3
Annualized Total Return of REITs by Property type in the Asia-Pacific Market

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

Mixed Use

RetailOfficeHotel

Industrial/ Apartment Healthcare
Logistics

1 year

13.9%

9.8%

16.1%

9.4%

24.7%

19.1%%

22.3%

3 years

7.8%

1.1%

5.8%

-1.2%

25.9%

13.6%

9.8%

5 years

7.1%

3.7%

6.6%

1.8%

17.2%

9.3%

8.5%

15%

10 years

12.4%

10.0%

12.7%

-

16.4%

15.3%

14.1%

12%

Source: APREA (based on a selected number of REITs in each market)

9%throughout the period). In the wave of capitalization in the new economy, industrial/
logistics REIT products led the market. As
of Dec. 31, 2021, the one-year and 10-year
annualized total returns of the Japan REIT
market were the highest, recorded at 20.1%
and 13.8% (Hong Kong SAR had the highest
10-year annualized total returns in 2019 and2020).

Figure 6: Historical Average Dividend Yield
18%

6%

3%

0%
2010

2011

2012

2013

2014
Japan

2015

2016

Singapore

2017

2018

2019

2020

Hong Kong

Source: Bloomberg Database, compiled by Cushman & Wakefield Valuation and Advisory Services. Data as of Dec. 31, 2021

16 | CUSHMAN & WAKEFIELD

2021

In the long run, REITs will likely bring investors considerable annualized total returns.

Data shows that the 10-year annualized total
returns for all property types have exceeded
10%. In the past three years, industrial/logistics REITs have developed rapidly, recording
10-year annualized total returns as high as
16.4%, followed by apartment and healthcare
REITs, registered at 15.3% and 14.1% respectively. Investment products most affected by
COVID-19 are those most closely associatedwith social distancing measures, which areprimarily retail and hotel REITs.

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2021-2022 Asia REIT Market Insight

3.4 PRICE-TO-BOOK RATIOWe define P/B ratio as the ratio of the market
price per fund unit (the market price on Dec.
31, 2021) to the net asset value per fund unit
(the net asset value per fund unit on Dec. 31,2021). If the ratio is greater than one, it is at
a premium, and if it is less than one, it is at a
discount.
P/B RATIO BY REGION
The P/B ratio of REIT markets in Asia are
generally lower than that in the UnitedStates. In 2021, the median P/B ratio of
REITs market in the U.S. was 1.7, of which themedian P/B ratio of equity REITs was as highas 2, which indicated a general premium in
U.S. REITs.
Of the Asia markets, REITs in Hong Kong
SAR have remained at a discount status forseveral years, with the P/B ratio at less than
1.0. Data shows that the average P/B ratioof REITs in Hong Kong SAR was at 0.91 as
at their IPO date. As at the end of 2021, theaverage P/B ratio of REITs in Hong Kong SAR
was 0.54, meaning that the trading priceon the secondary market was only 54% of
the net asset value. Trading price of REITs
in Hong Kong has been greatly impacted by
the pandemic, with the city’s border remaining closed for over two years. In addition,
REITs in Hong Kong had a higher proportionof traditional commercial properties whichwere more sensitive to the impact of thepandemic.
The average P/B ratio of REITs in Singapore
was 1.01 as at IPO. As at the end of 2021, theaverage P/B ratio was 1.0. In other words,
the trading price of Singapore REITs on thesecondary market were basically equivalent
to book net assets.
Given the fact that REITs in Japan saw alarge rise in share price in 2021, as at the endof 2021, the average P/B ratio of REITs in
Japan was 1.14, an increase of 5 bps year-onyear. In summary, J-REITs on average havebeen trading at a premium.
18 | CUSHMAN & WAKEFIELD

FIGURE 6: P/B Ratio by Region

FIGURE 7: P/B Ratio by Property Type
2.00
1.72

1.80

1.5

1.51

1.60
1.40

1.25

1.14
1.00

1

1.20
1.00

1.26

0.99
0.97

0.96

0.96

0.75

0.47

1.10

1.06
0.75

0.71

0.80
0.60

1.24

1.10

0.72

0.83
0.75

0.58
0.40

0.40
0.20

0.5

0.00

0.54
Hong Kong SAR

SingaporeJapan

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

Mixed Use

OfficeIndustrial

Japan

RetailSingapore

Hotel

Apartment Healthcare

Data
CenterHong Kong SAR

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

P/B RATIO BY PROPERTY TYPE
P/B ratios for REITs can vary greatly byproperty type. The impact of COVID-19 has
seen P/B ratios of retail and hotel REITs drop
sharply. The P/B ratios of network technology-related data center, healthcare, industrial/logistics and apartment REITs in Japanare high, while those of hotel REITs are low inevery market.
In Singapore, data center REITs led the average P/B ratio table at 1.72, while hotel andretail REITS bring up the rear at 0.75. The
Japan REIT market operates in a narrower
average P/B ratio band, with industrial/logistics REITs being the highest at 1.26, followed
by healthcare at 1.24, with hotel REITs thelowest at 0.83. In Hong Kong SAR, hotel,
retail, and mixed-asset REITs all traded at a
discount, with hotel REITs holding the lowest
average P/B ratio at 0.4.

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2021-2022 Asia REIT Market Insight

CONCLUSIONAND OUTLOOKIn 2022, we expect
demand for logistics
assets to remain
healthy, despite theheadwinds arisingfrom global supply
chain disruptions.

Asia market REITs have demonstrated notable resilience through the COVID-19 period— backed by robust capital structures, sufficient financial liquidity, and supportive regulatory policies — gaining overall momentum
to recover strongly during 2021. At the sametime, the explosive growth of online shopping during the pandemic has promoted
rapid expansion in related industry areas
such as e-commerce, while applications oftechnology have become probably irreversibly ingrained into daily lives. As face-to-faceinteractions have been curtailed, so virtualchannels have enabled people worldwide to
live, work and communicate more flexibly
and with more freedom.
On the one hand, the changes we have seenin channels of economic activity have undeniably brought unprecedented challenges to
traditional real estate sectors, such as officeproperties and traditional shopping malls.
On the other hand, the surge of activity inthe new economy has brought alternative
property types such as logistics parks anddata centers to the center of investors’ attention. In 2021, industrial/logistics REITs in the
Asia market showed the greatest resilience,
recording a total return of 24.7%. Researchshows that available warehousing space inAsia is becoming saturated, while attention
from Asia capital markets on warehouseand logistics assets, and relevant capital
allocation, have reached an unprecedented
level. Recent data reveals that leasing rates
of industrial/logistics REITs remained higheven during the peak COVID-19 period, with

20 | CUSHMAN & WAKEFIELD

e-commerce operators primarily driving
demand. Real estate asset sectors such as
medical facilities, student dormitories andother property types that are central todaily living and well-being needs have also
attracted greater attention.
In 2022, we expect demand for logistics
assets to remain healthy, despite the headwinds arising from global supply chain
disruptions. In fact, in some markets, supply
chain uncertainties are already resulting in aneed to expand and accumulate reserves of
warehouse space. Moreover, we expect thegrowth of REITs in developing markets, suchas mainland China, India, and Southeast Asia
(excluding Singapore), to accelerate as thesemarkets mature. In mature markets such asSingapore, we may see greater M&A activity
as investors look to increase their holdings
and market share. For instance, Mapletree
Commercial Trust (MCT) and Mapletree
North Asia Commercial Trust (MNACT)
announced their merger to form Mapletree
Pan Asia Commercial Trust (MPACT) in 2021.
The merger is expected to be completed
this year, achieving a total market value ofapproximately S$10.5 billion. Furthermore,cross-border acquisitions will likely remain
active as asset diversification now plays an
increasingly important role amid the rapidlychanging global economic environment. And
finally, 2022 is expected to be another record
year for Asia REIT IPOs, especially in China,
as local authorities encourage the development of infrastructure-backed REITs as animportant financing vehicle for developers.

CUSHMAN & WAKEFIELD | 21

2021-2022 Asia REIT Market Insight

Ascendas REIT (A-REIT) is Singapore’s firstand largest listed business space and industrial real estate investment trust, listed on the
Singapore Exchange (SGX) on Nov. 19, 2002.
Since its listing, A-REIT has grown from eightproperties valued at around S$600 million
in 2002 to 2,17 properties valued at around
S$16.3 billion as at Dec. 31, 2021.
It owns a well-diversified portfolio acrossmultiple countries, with 962 properties
in Singapore, 34 properties in Australia,
A-REIT STRUCTURE

UNITHOLDERSAPPENDIXCASE STUDY OF
ASCENDAS REIT

Distributors

Management
Fees

49 properties in the United Kingdom andEurope, and 41 properties in the UnitedStates, as at Dec. 31, 2021.
A-REIT is listed on several indices, including
the FTSE Straits Times Index, the Morgan
Stanley Capital International, Inc (MSCI)
Index, the European Public Real Estate
Association/National Association of Real
Estate Investment Trusts (EPRA/NAREIT)
Global Real Estate Index, and the Global
Property Research (GPR) Asia 250.

HSBC INSTITUTIONAL
TRUST SERVICES(SINGAPORE) LIMITED(TRUSTEE)

Acts onBehalf ofUnitholders

Trustee’s
Fee

Investment
in Ascendas
Reit

Management
Services

THE MANAGER
Ascendas Funds
Management (S)LimitedPROPERTIES /PROPERTY-HOLDINGCOMPANIES(1)Net Property
IncomeOwnershipof Assets

Asset/Property
Management
Services

Asset/
Property
Management
Fees

ASSET & PROPERTYMANAGERS(1)

18%

100%

SINGAPORE

AUSTRAILA

Ascendas Services
Pte Ltd

Ascendas Funds
Management(Australia) Pty Ltd

UK

US

CL International
Management (UK)Ltd

CapitaLand
International (USA)
LLC

100%

Source: A-REIT(1)Properties located in Singapore are held directly by Ascendas Reit.
Properties located in the Australia are held through wholly owned subsidiaries of Ascendas Reit, and are managed by Ascendas Funds Management (Australia)
Pty Ltd together with CapitaLand Australia Pty Ltd and third-party managing agents.
Properties located in the UK are held through wholly owned subsidiaries of Ascendas Reit and are managed by CL International Management (UK) Ltd (formerly
known as Ascendas management (UK) Ltd) together with third-party managing agents.
Properties located in the US are held through wholly owned subsidiaries of Ascendas Reit and are managed by CapitaLand International (USA) LLC together withthird-party managing agents.
(1) Excludes 25 & 27 Ubi Road 4, and iQuest@IBPin Singapore which are under redevelopment.

22 | CUSHMAN & WAKEFIELD

CUSHMAN & WAKEFIELD | 23

2021-2022 Asia REIT Market InsightPORTFOLIO OVERVIEWCapitaLand became A-REIT’s sponsor
following the integration of CapitaLand andAscendas-Singbridge on July 1, 2019. During
the financial year ending Dec. 31, 2019,
A-REIT acquired a record S$1.7 billion worthof properties from the sponsor.

Since its listing, A-REIT has grown fromeight properties in 2002 to 220 properties
as at Dec. 31, 2021. It owns a well-diversified
portfolio across multiple countries, with
96 properties in Singapore, 34 properties
in Australia, 49 properties in the United
Kingdom and Europe, and 41 properties in
the United States.

A-REIT is managed by Ascendas Funds
Management (S) Limited, a wholly owned
subsidiary of Singapore-listed CapitaLand
Investment Limited (CLI). CLI is a leading
global real estate investment manager witha strong Asian foothold. CLI made its trading debut on the Singapore Exchange (SGX)on Sept. 20, 2021. Its listing came after
CapitaLand Limited restructured its business to form two distinct entities: CLI, thelisted real estate investment managementbusiness, and CapitaLand Development, theprivatized property development arm. CLI
had about S$119 billion of real estate assets
under management as at June 30, 2021, of
which more than 80% are located in Asia. Its
real estate funds under management stoodat about S$83 billion, spanning six listed realestate investment trusts and business trusts
and over 20 private funds.

In Singapore, A-REIT owns a well-diversified
portfolio comprising business and sciencepark properties, integrated development,
amenities and retail properties, high-specifications industrial properties, light industrial
properties, and logistics and distribution
centers.

across key cities such as Sydney, Melbourne,
Brisbane, and Perth.
In the United Kingdom (UK), A-REIT’s logistics properties are situated in establishedindustrial areas across regions includingYorkshire and The Humber, North West
England, East and West Midlands, South
East England, and East of England. It also
owns a portfolio of data centers locatedacross European cities including London,
Manchester, Amsterdam, Paris, and Geneva.

The portfolio in Australia includes logistics and suburban office properties located

The portfolio in the United States (U.S.)
comprises business park and office properties located across the technology cities
of Portland, Raleigh, San Diego, and San
Francisco, as well as logistics properties in
Kansas City.

DIVERSIFIED PORTFOLIOGEOGRAPHICALLY

DIVERSIFIED PORTFOLIOBY ASSET CLASS
Data Centre,
9%

United Kingdom /Europe, 11%

PORTFOLIO OVERVIEW
Valuation (S$billion)Gross Floor Area(sqm)

Occupancy Rates

Singapore portfolio (93properties)

9.93

3,066,797

90.2%

Australia portfolio (34properties)

2.32

788,396

99.2%

United States portfolio(41 properties)

2.28

551,856

94.5%

United Kingdom /Europe portfolio (49properties)

1.76

590,393

96.7%

TOTAL

16.29

4,997,442

93.2%

Industrial,
20%

UnitedStates, 14%

Total Investment
Properties
S$16.3 billion

Total Investment
Properties
S$16.3 billion
Australia,
14%
Singapore,
61%

Business
Space, 48%

Logistics &Distribution
Centre, 23%

Source: A-REIT, Cushman & Wakefield
Source: A-REIT, Cushman & Wakefield
Data as at Dec. 31, 2021

Note:
Business Space includes business and science park properties and offices, and suburban offices
Logistic & Distribution Centre comprises logistics properties
Industrial comprises high specification industrial properties, light industrial properties and flatted factories, integrated developments, and amenities and retail properties

24 | CUSHMAN & WAKEFIELD

CUSHMAN & WAKEFIELD | 25

2021-2022 Asia REIT Market Insight

HISTORICALPERFORMANCEThe occupancy rate of the Singapore portfolio climbed to 90.2% as at Dec. 31, 2021,
from 88.5% as at Dec. 31, 2020. This could
be mainly attributable to the divestment of 1
Science Park Drive and higher occupancy forsome business and science park and logistics
properties.
The overseas portfolio occupancy rates
remained high at 99.2% for Australia (as atend 2021), 96.7% for the UK / Europe (as atend 2021) and 94.5% for the U.S. (as at end
2021).
A-REIT has a diverse customer base withmore than 1,230 tenants and strong industry exposure to over 20 industries which will
help it maintain stable performance. The
portfolio Weighted Average Lease Expiry(WALE) stood at 3.8 years as at the end of
December 2021, only a slight drop from 4.1
years observed in 2020. For the past ten
financial years, WALE ranged between 3.7
years to 4.3 years. The 3.8-year WALE levelis still healthy with well-spread lease expiry,
extending beyond financial year 2036, ensuring a relatively stable and predictable future
income. Only about 18.7% of gross rental
income will be due for renewal in FY2022.
The WALE in Singapore was at 3.4 years, theU.S. was 4.4 years, Australia was 3.5 years
and the UK / Europe was 5.7 years.

OCCUPANCY AND WEIGHTED AVERAGE LEASE
EXPIRY (WALE)
100%

5

80%
4
60%

40%
3
20%

0%

2

Occupancy Rates

WALE (Years)

During 2021, net operating income rose by
18.6% y-o-y to S$920.8 million, in line withthe 16.9% increase in gross revenue.
For the past ten years, net property income
has increased at a compound annual growthrate (CAGR) of 9.6% per annum (p.a.) while
total revenue has risen at a similar CAGR
of 9.3% p.a., indicating sustainable growth.
Net property income margin ratios haveremained relatively stable over the past
years, hovering between 69% and 77%.

Source: A-REIT, Cushman & Wakefield

WALE (as at 31 December 2021)

REVENUE, NET PROPERTY INCOME AND NET PROPERTY INCOME MARGIN RATIOS

Years

1,400

Singapore

90%

3.4

Australia

3.5

United States

4.4

United Kingdom / Europe

5.7

Portfolio

3.8

80%

1,200

70%
1,000
60%

S$ million

As at Dec. 31, 2021, A-REIT’s overall portfolio occupancy rate stood at 93.2%, up from
91.7% in the previous year. For the past six
financial years, the occupancy rate of its
portfolio has remained relatively stable atmore than 90%. Despite the pandemic, occupancy rates improved from 90.9% in 2019
to 91.7% in 2020, given the resilient performance of assets in the portfolio.

In general, net property income has been on
the rise in tandem with the increase in grossrevenue, except for financial year 2019, due
to the change in reporting year. In July 2019,
A-REIT announced that it changed its financial year end from March 31 to December 31.
Therefore, financial year 2019 was a ninemonth period from April 1, 2019, to Dec. 31,
2019.
Years

PROPERTY RENTAL SITUATIONPROPERTY INCOME

800

50%

600

40%

Source: A-REIT, Cushman & Wakefield

30%
400
20%
200

10%

0

0%
2012/132013/142014/15

Revenue (million)

2015/162016/172017/18

Net Operating Income (million)

2018/19

2019*

2020

2021

Net Property Income Margin Ratio

Source: A-REIT, Cushman & Wakefield
Note: * In July 2019, A-REIT announced that it changed its financial year end from March 31 to
December 31. Therefore, FY2019 was a nine-month period from April 1, 2019, to Dec. 31, 2019.

26 | CUSHMAN & WAKEFIELD

CUSHMAN & WAKEFIELD | 27

2021-2022 Asia REIT Market Insight

DISTRIBUTION PER UNIT AND DISTRIBUTION YIELDGenerally, the Distribution Per Unit (DPU)
has been following a rising trend, except
for financial year 2019 due to the change inreporting year from March 31 to December
31. Therefore, financial year 2019 was anine-month period from April 1, 2019, toDec. 31, 2019.

8%

16

7%

14

6%

12

cents

5%

10

Distribution yield stood at around 5.2% in
2021, a marginal increase from 4.9% in thepreceding year given the rise in DPU during2021. In general, distribution yields in recent
years were lower despite stable growth in
DPU, mainly due to the rise in share prices.

4%
8
3%

6

2%

4
2

1%

0

0%

TOTAL PROPERTY VALUATION

Across different countries, Singapore has
the highest proportion of both leasablearea and total property valuation at 61.4%
and 61.0%, respectively, followed by theAustralia portfolio.

%

Gross Floor
Area (sqm)%Singapore portfolio (93 properties)

9.93

61.0%

3,066,797

61.4%

Australia portfolio(34 properties)

2.32

14.2%

788,396

15.8%

United States
portfolio (41properties)

2.28

14.0%

551,856

11.0%

United Kingdom /Europe portfolio(49 properties)

1.76

10.8%

590,393

11.8%

TOTAL

16.29

100%

4,997,442

100%

Distribution per unit (cents)

Distribution Yield

Source: A-REIT, Cushman & Wakefield

LEVERAGE PROFILE

Note: * In July 2019, A-REIT announced that it changed its financial year end
from March 31 to December 31. Therefore, FY2019 was a nine-month period
from April 1, 2019, to Dec. 31, 2019.

The aggregate leverage levels remained
healthy over the years, staying well below
the 50% level (the leverage limit set by the
Monetary Authority of Singapore) with the
10-year average leverage of only 33.7%. This
indicates a sound capital profile for A-REIT,TOTAL PROPERTY VALUATION
20.0%

18.0
16.0

with opportunity for an increase in borrowing to finance further acquisitions / developments. Interest coverage ratios also stayedrobust throughout the years and stood at 5.7
as at end of 2021.

CAPITAL PROFILE
16.0%

14.0
12.0

12.0%

10.0
8.0

Ratio

4.0

4.0%

2.0

40%

6

35%
30%
25%

8.0%

6.0

7

5

%

Notably, annual growth rates of total
property values were very strong during
2019 and 2021. Total investment properties increased by 15.7% to S$12.8 billion
during financial year 2019, bolstered by
the acquisitions of 31 properties acrossthree markets. Specifically, a record S$1.8
billion worth of properties were acquired,of which around S$1.7 billion worth ofproperties were acquired from its sponsor, CapitaLand, following the integrationof CapitaLand and Ascendas-Singbridge
on July 1, 2019. During 2021, A-REIT also
completed a record S$2.1 billion of acquisition / developments, which resulted in thegrowth of total property investments by
19.0% to S$16.3 billion from S$13.7 billion
registered in the preceding year.

Valuation(S$ billion)

Source: A-REIT, Cushman & Wakefield

S$ billion

A-REIT’s total property valuation has been
growing over the years on the back ofactive acquisition of new assets, divestment, and asset enhancements works forexisting properties.

As at 31
December 2021

4
20%
3
15%
2

0.0%

1

Annual Growth Rate0

0.0
2017/18

2018/192019*

Total property valuation (billion)
Source: SGX, A-REIT, Cushman & Wakefield

2020

2021

%

The steady increase in A-REIT’s DPU over
the years has indicated healthy performance of the REIT on the back of prudent
capital management and deployment.

18%

DISTRIBUTION

10%
5%
0%
2012/132013/142014/15

2015/162016/17

Interest Coverage Ratio

2017/18

2018/19

2019*

2020

2021

Aggregate Leverage

Source: SGX, A-REIT, Cushman & Wakefield
28 | CUSHMAN & WAKEFIELD

CUSHMAN & WAKEFIELD | 29

2021-2022 Asia REIT Market Insight

THREE-PRONGED STRATEGY
NET ASSET VALUE (NAV) PER UNIT AND
SHARE PRICE ANALYSIS
A-REIT’s NAV per unit has largely followed
a rising trend over the past ten years while
share prices experienced some fluctuations.
In general, NAV per unit rose at a CAGR of
2.4% p.a. whereas share prices increased

at faster pace of 5.1% p.a. during the 10-year
period. The price-to-NAV ratios of A-REIT also
stayed above one during the past years, indicating good performance of its shares whichwere traded at a premium to its book values.

3.5

35.0%
30.0%

3

25.0%
2.5

1.5

10.0%

%

S$

15.0%

5.0%

1

-5.0%

0

PRUDENT CAPITAL & RISKMANAGEMENT

Maximizing organic growthpotential and returns of theportfolio through active
asset management. The
Manager works closelywith the asset and property
managers in carrying out
these principal strategies
and the relevant activities.

Undertaking disciplined
value-adding investments
through acquisitions anddevelopment of high-quality
properties.

Optimizing A-REIT’s funding structure and costs.
Maintaining an effective
system of risk management
and internal controls.

•

Acquiring income-producing properties leased toestablished customers•

Providing high standardsof property and customer
services to customers••

Enhancing operational efficiency and optimization ofoperating costs

Acquiring high-quality•
properties with strong
income stream and/ or asset
enhancement potential••

Carrying out asset enhancement initiatives

Developing build-tosuit projects to cater toprospective customers’
operational requirements
and specifications-10.0%
2012/132013/142014/15

NAV Per Unit

2015/16
Share Price

2016/172017/18

2018/19

NAV Per Unit Growth Rate

2019*

2020

2021

•

Selective development/
redevelopment to capitalizeon the Manager’s development capabilities•

Sourcing of overseas
investment opportunities tostrengthen portfolio diversification and resilience

Share Price Growth Rate

Source: SGX, A-REIT, Cushman & Wakefield

MANAGEMENT STRATEGY
The healthy historical performance of A-REIT based on theabove analysis has shown aprudent capital management
strategy as well as the deep
experience and expertise of the
REIT’s manager. By optimizing
asset portfolios, the manager
can ensure sustainable returns tounitholders.
The manager employs an appropriate mix of six types of capitaland a three-pronged strategy todrive its business activities.

Six Types of Capital
Environmental Capital

Energy and water are important resources to thebusiness operations of A-REIT

Manufactured Capital

Capability to acquire and develop high-quality
properties to achieve value-adding investments

Human CapitalCommitment and drive from employees, andasset and property managers contributetowards business growthSocial & Relationship
CapitalFostering strong relationships with stakeholders
to actively understand and manage their expectations and create a shared value in the longterm

Organizational CapitalSpecialized asset management expertise andknowledge to develop premium and attractive
solutions

Financial Capital

Available pool of funds leveraged to optimize
value for Stakeholders•

Proactive marketing andleasing of spaces to achievea healthy occupancy rate

0.0%
0.5

DISCIPLINED VALUEADDING INVESTMENTS

•

20.0%

2

PROACTIVE PORTFOLIOMANAGEMENT

Regular reviews ofAscendas REIT’s debt andcapital management, andfinancial policy
Diversifying sources offunding, managing interest
rate risk, liquidity risk, credit
risk and foreign currency
risk•

Monitoring Ascendas REIT’s
exposure to various risk
elements and externallyimposed requirements inthe markets it operates in byclosely adhering to clearly
established management
policies and procedures•

Risk management policies
and systems are reviewed
regularly to reflect changes
in market conditions andAscendas REIT’s strategic
direction•

Creating an acceptablebalance between the benefits derived from managing
risks and the cost of managing those risks
Source: A-REIT

Source: SGX, A-REIT, Cushman & Wakefield
30 | CUSHMAN & WAKEFIELD

CUSHMAN & WAKEFIELD | 31

AUTHORS:
Gilbert Dong
Senior Manager,
Valuation and Advisory Services,
North China
gilbert.yf.dong@cushwake.com

Kim Huynh
Manager, Research,
Singapore
kim.huynh@cushwake.com

Kate Zhang
Assistant Manager,
Valuation and Advisory Services,
North Chinakate.zhang@cushwake.com

Wanying Zou
Assistant Valuer,
Valuation and Advisory Services,
North China
wanying.zou@cushwake.com

EDITORS:
Catherine Chen
Director, Research,
Asia Pacific,
catherine.chen@cushwake.com

Simon Graham
Senior Communications Manager,
Greater China,simon.graham@cushwake.com

REPORT CONTRIBUTORS:
Dominic Brown
Head of Insight & Analysis,
APAC
dominic.brown@cushwake.com

Hideaki Suzuki
Senior Research Director,
Head of Business Development Services,Japanhideaki.suzuki@cushwake.com

Xian Yang Wong
Head of Research,
Singapore
xianyang.wong@cushwake.com

Suvishesh Valsan
Director, Research,India
suvishesh.valsan@cushwake.com

FOR REQUESTS ON GREATER CHINA REIT VALUATION, PLEASE CONTACT:
Andrew ChanManaging Director,
Valuation & Advisory Services,
Greater China
andrew.kf.chan@cushwake.com

Feng Hu
Deputy General Manager,
Beijing Office
Head of Valuation &Advisory Services, North Chinafeng.hu@cushwake.com

Chris Yang
Director,
Valuation & Advisory Services,
North China
chris.z.yang@cushwake.com

FOR REQUESTS ON REIT VALUATION IN OTHER MARKETS, PLEASE CONTACT:
Dennis Yeo
Head of Investor Services,APAC
dennis.yeo@cushwake.com

The information contained within this report is gathered from multiple sources
considered to be reliable. The information may contain errors or omissions and ispresented without any warranty or representations as to its accuracy.
Copyright © 2022 Cushman & Wakefield. All rights reserved.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm thatdelivers 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 approximately 60 countries. In 2021, the firm had revenueof $9.4 billion across core services of property, facilities and project management,
leasing, capital markets, and valuation and other services. To learn more, visit www.
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