Want India Exposure? 1 Singapore REIT to Buy and Hold for the Next Decade

India Singapore REIT

Tim Phillips

January 10, 2023

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Singapore’s stock market has been a “safe haven” of sorts from global headwinds battering other markets.

However, we all know that, at the end of the day, we should be diversified geographically in our investments.

One of the best places for investment returns in recent years has been India – given the country’s growth trajectory and massive population.

In fact, with talks of supply chain issues stemming from China, there is a marked shift towards a repositioning of certain supply chains outside of China.

Normally, this means elsewhere in Asia. One of the key beneficiaries of this trend over the next decade is likely to be India.

So, for investors wanting some investment exposure to India, here’s one less well-known Singapore business trust that’s worth buying now and holding until 2033.

REIT backed by CapitaLand firepower

In Singapore, the only pure-play REIT for the India market is CapitaLand India Trust (SGX: CY6U), also known as CLINT.

Formerly known as Ascendas India Trust (a-iTrust), it has recently rebranded itself to reflect the merger of CapitaLand Limited with Ascendas Pte Ltd and Singbridge Pte Ltd in 2019.

While it functions like a REIT and is (for all intents and purposes), CLINT is actually structured as a business trust.

As recently as 2021, it was one of the best-performing REITs in Singapore over the prior decade.

The trust owns 11 properties; eight IT parks, one logistics park, one industrial facility and one data centre development.

These are located across key commercial hubs in India, including Bangalore, Chennai, Hyderabad, Pune, and Mumbai.

Looking to growth ahead

India is looking to benefit from the shift away from Chinese manufacturing. As a result, CapitaLand India Trust is perfectly positioned to benefit from the increased demand for suitable properties.

This includes both logistics and data centre assets. Some of its biggest tenants are established companies operating in India.

They include the likes of Tata Consultancy Services, Amazon, Bank of America, Applied Materials and Larsen & Toubro.

While it only has one data centre asset right now, it has a further three in development. As recently as December 2022, CapitaLand India Trust acquired a site in Chennai to develop a data centre that will be completed by the end of 2025.

With an estimated total investment of INR 19.4 billion (S$328.8 million), the trust will acquire the site and develop a state-of-the-art data centre in phases over the next four to five years.

The trust is also planning to develop a fourth data centre in Bangalore.

As readers can see below, CLINT has a significant portion of its base rental coming from tenants that are US companies – highlighting the opportunity many of the world’s biggest firms see in India.

CapitaLand India Trust tenants

Source: CapitaLand India Trust Q3 2022 business update

Impressive portfolio growth

Since its IPO in 2007, CapitaLand India Trust has managed to grow its portfolio (measured as total floor area) by a compound annal growth rate (CAGR) of 10%.

At its IPO its portfolio had 3.6 million sq ft of space and as of the end of September 2022, that had grown to 15.5 million sq ft.

A mixture of development and acquisitions has helped the trust expand. It also has a relatively stable funding profile, with a gearing ratio of 37% and 78% of its debt on fixed rates.

While its effective weighted average cost of debt is relatively high, at 5.8%, it still has available debt headroom of S$820 million – before it hits the gearing limit of 50%.

The trust does have a decent level of customer concentration though, with its top tenant – Tata Consultancy Services – making up 12% of its overall base rents.

Banking on Indian-driven dividends

Overall, with a strong sponsor in CapitaLand, CLINT has a solid pipeline of potential assets it could acquire and develop in India.

With so many opportunities across the logistics, industrial, and data centre spaces, CapitaLand India Trust could offer dividend investors a potential dual growth and income play.

As its current price, CapitaLand India Trust shares are offering investors a 12-month forward dividend yield of 7.4%.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.

About the Author: Tim Phillips

Tim Phillips
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.