GLOBAL - GIC's European head of real estate today denied reports that Singapore's largest sovereign wealth fund (SWF) plans to list its real estate portfolio. However, he did not deny that the fund could list a portion of it.
"We're categorically not listing our entire portfolio," Chris Morrish told IPE Real Estate, "but we look at things all the time."
According to its most recent annual report, GIC's real estate assets account for 12% of the US$300bn (€247bn) portfolio. Recent reports claimed the SWF planned to list at least its Asian industrial and logistics holdings in a US$1bn initial public offering (IPO). The assets most likely to be listed include a portfolio of Asian logistics assets acquired from ProLogis in 2008.
Economists such as CIBM Malaysia's Song Seng Wun have speculated that listing part of the portfolio as a real estate investment trust (REIT) structure would enable GIC to raise funds for new investments and bag fees from outside investors.
The SWF recently invested 5% in Malaysian property firm SunCity's MYR3.7bn (€0.9bn) Sunway REIT, which will list later this year. GIC already owns a 21% stake in the parent group.
Meanwhile, credit rating agency Moody's has revised upwards its outlook for Singapore REITs (S-REITs) from negative to stable. In a note, the agency said the shift reflected its view that "the sector's fundamental credit conditions will neither erode nor improve materially over the next 12 to 18 months".
The note's authors also cited a strong macro rebound, the stabilisation of rents across sub-sectors, and S-REITs' steady performance and lower refinancing risk.
The Singapore economy registered annualised growth of 13% in Q1, largely driven by exports, while domestic and regional growth has encouraged stronger demand for office space. Although there remains a danger of oversupply in office, retail and industrial in 2010 and 2011, a downward rental trend over the past year has already factored it in, the analysts argued.
Levels of debt maturing in 2010 are relatively low. S-REITS with debt due for repayment next year already showed themselves adept at refinancing during 2009's significantly worse economic conditions.