Robinsons and Department Store Exposure on Various S-REITs

by: Tam Ging Wien


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Robinsons – the home grown iconic department store brand founded just over 160 years ago has finally called it quits. It announced closures of the last of its Singapore stores last Friday (30-Oct) at The Heeren (Orchard Road) and Raffles City Shopping Centre (City Hall). In August this year, Robinson had also closed its Jem (Jurong East) outlet.

Robinsons count among the oldest retailers in Singapore and many especially the older generation would have fond memories of shopping at Robinsons. Having survived 2 world wars and the great depression, it had finally caved into to the rising trend of ecommerce, highly competitive retail scene and finally the COVID-19 pandemic.

Now replacing what was once a vibrant website; a simple message that it had appointed KordaMentha as its provisional liquidators.

Source: https://www.robinsons.com.sg/

At around the same time, news of two US retail REITs filing for bankruptcy caused many to question what is the impact on the shifting retail scene in Singapore and resultant impact on the retail S-REITs in the near future.

In this article, we take a look at the impact that Robinson’s exit may have on CapitaLand Integrated Commercial Trust (CICT) and exposure of other Singapore retail REITs to the large format department store owners such as Mapletree Commercial Trust (MCT), Frasers Centrepoint Trust (FCT), Starhill Global REIT and SPH REIT.

Besides Robinsons, other significant department store operators in Singapore include Isetan, Tangs, BHG, Takashimaya and Metro. All of which are partly or fully utilizing S-REIT floor spaces.

CapitaLand Integrated Commercial Trust

CICT was formed from the merger of CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT) effective from 03-Nov-2020. For more information on this merger, do refer to our previous article entitled CapitaLand Mall (CMT) and Commercial (CCT) Trust – A Merger of Two Giants.

As for as Robinson goes, the only REIT that is being directly impacted is CICT at Raffles City Shopping Centre which is a joint venture ownership between CCT and CMT with a 60-40 ownership ratio. To clarify, Raffles City Shopping Centre is located within Raffles City Singapore which is a mixed development with a total net lettable area of 808,150sqft and a convention centre and a hotel with 2030 rooms. The floor place is further split into:

  • Office - 381,320sqft
  • Retail - 426,830sqft

A quick check on Raffles City Singapore’s Q3-2020 financial results show that it derives 8.0% of its gross revenue from “Department Stores”.

Source: Raffles City Singapore Results

A further check on CapitaLand’s website for “Department Stores & Value Stores” in Raffles City Shopping Centre reveals that there are 3 namely Marks & Spencer, Muji and Robinsons. Therefore the 8% department store gross rental income contribution may not be fully attributed to Robinsons.

Source: CapitaLand

Looking at the floor plans of Raffles City Shopping Centre, we can see that Robinsons takes up floor places on L1, L2 and L3 while Marks & Spencer and Muji are only located at L2. If we were to make an guestimate, we would say that that Muji, Marks & Spencer and Robinsons would likely have floor spaces in the ratio of 1:2:10. Assuming all these brands pay approximately the same rental per sqft, Robinsons is likely to contribute around 6% of the total gross rental income for Q3-2020.

It is worth noting that both Marks & Spencer and Robinsons are brands of the Dubai based Al-Futtaim Group distributorship in Singapore. Examples of Other brands that the Al-Futtaim Group has distributorship rights in Singapore are Zara, Ted Baker, Bershka, Lacoste, Mango, Massimo Dutti, Pull & Bear, Nautica, Oasis, Golf House, Reebok, Roxy, Stradivarius, Vans Off The Wall and Royal Sporting House.

For the retail sector for Raffles City Singapore, occupancy presently stood at 97.1%. Thanks to the wonders of the internet, we managed to find an old Business Times article dated 18-Apr-2014 stating that both Marks & Spencer and Robinsons leases had been renewed and both collectively take up 100,000sqft of floor space. Given that the entire retail floor space is 426,830sqft, the occupancy rate could weaken a further 23.4%, down to 73.7% for the retail segment of Raffles City Singapore.

The 6% loss of income would equate to approximately S$2.9mil loss of rental income per quarter or about S$11.7mil per year based on the Q3-2020 gross revenue figures for Raffles City Singapore. In the bigger scheme of things, both CMT and CCT’s gross revenue for Q3-2020 came in at S$150.3mil S$94.7mil, excluding the contribution from Raffles City Singapore. Hence, the loss of Robinsons as a tenant would hit CICT’s top line by about 1%. The bottom line and DPU impact are a bit harder to estimate, but it should be between 0.75% to 1.50% or there about.

The impact of Robinsons on the entire CICT group portfolio at this moment appears to be fairly mild based on our assessments and guestimates.

But what about the other Al-Futtaim Group brands in CICT’s portfolio? Fortunately for us, DBS Bank saved us a lot of time and released a report this week of the store count exposure of each retail S-REIT Al-Futtaim Group brands.

With a single glance, it seems CMT has the largest exposure to the Al-Futtaim Group brands followed by MCT and Lendlease REIT.


Source: DBS Bank

Besides Robinsons, CICT also has department store exposure to Isetan in Tampines Mall and BHG in Bugis Junction, Junction 8 and Lot One.

If one where to consider Muji, Marks & Spenser and Daiso as department stores, then these brands have a presence in Plaza Singapura, IMM and Raffles City Singapore.

Overall, we estimate CICT’s portfolio has approximately a 2% exposure to department stores with Robinson being the largest of the exposure.

Mapletree Commercial Trust

MCT has only one retail mall, Vivocity – the largest by floor space in Singapore. Vivocity has 2 anchor tenants namely NTUC Fairprice and Tangs. We estimate that Tangs takes up approximately 75,000sqft in Vivocity based on its opening figure in 2006 with 85,000sqft but was later reduced and reconfigured by 9,200 in 2017.

Source: Mapletree Commercial Trust

While MCT did not specifically disclose the gross rental income exposure to Tangs, we can guestimate from the presentation slides.

Give that NTUC Fairprice Co-op is among the top-10 tenants and contributes approximately 1.7% of the gross rental income and Hypermarkets and department stores contribute 3.6% of the portfolio’s gross rental income, that means other than Fairprice, this category contributes 1.9% of their gross income.

Given that Tangs does not appear in the top 10 list, its contribution must be less than 1.7%. The remaining 1.9% are likely to be contributions from Tangs, Daiso and Muji. From the floor plans of Vivocity, we again guestimate that Tangs contribution to gross rental incomes is likely to be in the range of 1.2% to 1.5% of MCT’s annual gross rental income.


Source: Mapletree Commercial Trust


Source: Mapletree Commercial Trust

Frasers Centrepoint Trust

FCT has quite several retail malls including the freshly acquired Asia Retail Funds malls which count Tiong Bahru Plaza, Hougang Mall, Tampines 1 and White Sands among their portfolio of malls. A quick search across FraserseXperience site shows that only had exposure to one department store which is Metro located at Causeway Point. Causeway Point is one of FCT’s largest malls and account for 47.4% of FY2020’s net property income for the original portfolio before inclusion of ARF’s portfolio of malls.

Source: FraserseXperience

Based on the latest results release by FCT, Metro accounts for 4.2% of the total net lettable area and 2.6% of the total gross rental income. The table of the trade categories exposure also tallies with the top-10 tenant exposure with department stores making up 2.6% of the total gross rental income which supports the fact that FCT’s entire portfolio only has exposure to one department store which is Metro.

Source: Frasers Centrepoint Trust


Source: Frasers Centrepoint Trust

We will also need to consider the fact that the above is based on pre-consolidation of the ARF portfolio. If the ARF portfolio is included, the total gross rental income could be about 60% to 70% higher which would imply that the 2.6% gross revenue exposure of Metro could be further diluted down to about 1.5% to 1.6% of FCT’s annual gross rental income.

SPH REIT

SPH REIT has exposure to BHG in Clementi Mall and Metro in Paragon. Paragon also counts Marks & Spenser and Muji as tenants. Trying to quantify the exposure to these malls are a lot harder as SPH REIT does not specifically match the Top-10 tenants against their rental income contribution percentage, therefore we need to make some educated guesses from the information below on the department store exposure in SPH REIT.


Source: SPH REIT

Out of the listed top-10 tenants, the following would be classified as “Departmental Stores & Supermarket Lifestyle”:

  • Baccarat International (Pte.) Limited
  • Cold Storage Singapore (1983) Pte Ltd
  • Metro (Private) Limited
  • NTUC FairPrice Co-operative Limited

Baccarat International distributes the Marks & Spenser brands while Cold Storage operates Paragon Market Place. The operation for the remaining 2 should be obvious.

We need to turn to 3rd party sources for some clues and we note that Metro in Paragon takes up 77,000sqft. With Paragon having a net lettable area of 717,160sqft, Metro takes up about 10.7% of Paragon’s floor space.

Cold Storage Supermarket is the anchor tenant of The Rail Mall occupying 11,828sqft out of the 49,767sqft net lettable area. We were not able to find out the floor space that Paragon Market Place occupies which is operated by Cold Storage. However, given that it is unlikely to come close to the floor space of Metro, we think that Cold Storage is likely not the largest tenant among the 4.

As for Clementi Mall, BHG takes up approximately 11,000sqft of out an approximately net lettable area of 191,000sqft, about 5.8% of the floorspace.

Given what we know about the floor space and the top-10 tenants and their rental contributions, our guess are as follows percentages to SPH REIT’s portfolio of rental income:

  • Metro – 3.8%
  • Cold Storage – 2.3%
  • NTUC FairPrice Co-op – 1.2%
  • Baccarat Intl – 1.1%

If our guesses are right, then Metro’s contribution to gross rental incomes is likely to be in 3.8% of SPH REIT’s annual gross rental income. This is significantly higher than MCT, FCT and CICT that we had guesstimated earlier.

Starhill Global REIT

11-Nov-2020 Text Update and Clarification:

According to Starhill Global REITs latest Annual Report:

  • The Wisma Atria Property comprises 257 strata lots representing 74.23% of the total share value of strata lots in Wisma Atria.
  • Ngee Ann City Property consists of four strata lots representing 27.23% of the total share value of strata lots in Ngee Ann City.

Hence Starhill Global REIT's overall exposure to had previously assumed that Starhill Global REIT owns 100% of Ngee Ann City, this is however an incorrect assumption. Readers are advised to adjust the assumptions and take note of the error in the preceding article.

Source: Starhill Global REIT Annual Report

Unedited Original Text:

Starhilll Global REIT has exposure to 2 major department stores in Singapore which namely Takashimaya in Ngee Ann City and Isetan in Wisma Atria.

It is clear from Starhill’s presentation slides that Takashimaya which is owned and operated by Toshin contributes 87.1% of Ngee Ann City gross rental income. In the last financial year, Ngee Ann City generated S$58.838mil in rental, hence contribute S$51.2mil of gross rental income to the REIT as a whole. Given that FY2019/20 total gross rental income came in at S$180.8mil, Starhill Global REIT’s exposure to Toshin comes in at 28.3% of the portfolio, far higher in terms of department store exposure any of the previous REITs guestimates above by a wide margin!

With regards to the Wisma Atria property, if we understand their business correctly, Isetan is the master tenant at the Podium block an treats its tenancy at Wisma Atria as an “Investment Property” and its actual department store operations are at Isetan Orchard Scotts. Within the spaces, luxury, fashion retailers and F&B outlets operate there such as Mango, iora, TAG Heuer, Frank Muller, Longines, Sony Gallery and Paradise Dynasty operated there. According to Isetan’s annual report, it takes up 104,732sqft of floor space out of Wisma Atria’s total 126,251sqft net lettable area – about 83%. Based on the understand the Isetan treat’s Wisma Atria’s floorspace as an investment property and does not run its full department store operation there, we will not consider Isetan’s presence at Wisma Atria a department store exposure to Starhill Global REIT’s portfolio.


Source: Starhill Global REIT

Concluding Remarks

The departure of Robinsons from the Singapore retail scene came as quite a surprise to many. But this event calls into question the viability of the department store business modal in the current age of ecommerce, increased competition, and the pressure of limited foot traffic because of control measures during this season of COVID-19.

We have looked across the wide-ranging S-REIT retail spectrum and found that department stores are common exposures in many of the retail S-REITs. However, what we discovered is that most REITs have a very limited exposure to department stores ranging from 1.2% to 3.8% of the portfolio’s gross rental income for FCT, CICT, MCT and SPH REIT. However, we observe that Starhill Global REIT is exceptional with nearly 28.3% of the portfolio’s gross rental income exposure, mainly due to Takashimaya’s large exposure at Ngee Ann City.

S-REITs with the lowest overall gross rental income exposure to department stores are FCT and MCT with 1.6% and 1.5% respectively according to our guestimates. The other retail S-REITs have 2% or higher exposure.

Will existing department stores in Singapore such as Tang’s, Isetan, Takashimaya, Metro, and BHG continue to be viable and reliable tenants to the REITs? This is a question that S-REIT investors would need to seek an answer for themselves before investing. If investors expect that Robinsons is the first of many department stores to exit the Singapore market, then it would be worthwhile to limit exposure to retail S-REITs with significant department store tenant rental contributions.

Positioning to Ride the Recovery

Opportunities and Risk Post-COVID-19 Pandemic in the various S-REIT Sectors

The COVID-19 crisis has brought about an unprecedented economic shock to many sectors, and yet it has also generated opportunities in others.

The tech sector has been a major beneficiary and along with that, S-REITs exposed to the Data Centre sector such as Keppel DC REIT and Mapletree Industrial Trust gained phenomenally.

But are the investment opportunities in REITs now gone? Personally, we do not think so. There are still many REITs below their pre-COVID-19 levels poise to recover strongly in the coming quarters – and now it is the best time to prepare to capture the post-COVID recovery.

Join us as we discuss the opportunities and risk in the S-REIT space sector-by-sector as we try to uncover recovery opportunities for FY2021 and beyond. Real estate sectors that we will be covering include the Retail, Hospitality, Offices, Healthcare, Industrial and Data Centres.

Our speaker Tam Ging Wien will be sharing his knowledge and experience including:

  • Part 1: A Survey of the REITs Landscape Around The World
  • Part 2: Key Metrics in Identifying Strong REITs
  • Part 3: Real Estate Sector Review Amidst the COVID Crisis
  • Part 4: Screening for Opportunities
  • Part 5: Q&A

Some key highlights that will be covered includes:

  • Real estate sector-by-sector review on COVID-19 impact and recovery opportunities. Sectors covered include the Retail, Hospitality, Offices, Healthcare, Industrial and Data Centres.
  • Opinion on which sector will continue to stay resilient and which are poised to recover quickly post-pandemic
  • The right metric to use when screening for high quality REITs
  • Case studies of REITs which are considered high quality
  • Step-by-step demo of how to screen for high quality REITs on your own

During the sharing session, various Singapore-listed REIT examples will be used.

There will also be a Q&A so that members of the investing community may engage in open dialog and discussions in order to deepen their understanding of REITs. Do prepare your writing materials for note taking.

Please note that the duration of the on-site seminar is 7pm to 9:45pm Singapore Time (GMT +8).

The details of the event are as follows:

  • Seminar: Positioning To Ride The Recovery
  • Date: 5th May 2021 (Wed)
  • Time: 7:00pm to 9:45pm
  • Venue: RNN Conference Centre - Kyoto Training Room (Level 4), 137 Cecil Street, Cecil Building #04-01, Singapore 069537
  • Fees: S$10.00
  • Sign-up Link: http://reitessentials.eventbrite.com/

To learn more about REITs, we recommend the article: What are REITs?

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