By comparison, Malaysia, Indonesia, Thailand, Vietnam and the Philippines have been hit with tariffs of 24%, 32%, 37%, 46% and 17% respectively.
“The government has established the Singapore Economic Resilience Task Force (SERTF) to help businesses and workers navigate the uncertainties arising from the US’s reciprocal tariffs and related global developments, thereby strengthening Singapore’s resilience to thrive in the new economic landscape,” adds Chen
In an update on May 16, Deputy Prime Minister Gan Kim Yong, who chairs the SERTF, announced that the US has offered to discuss concessions for Singapore on preferential tariffs, potentially to the extent of zero tariffs, for Singapore’s pharmaceutical exports to the US, to ensure a secure supply chain.
Additionally, discussions are open about how Singapore can ensure a continued supply of semiconductors to the US.
On this, the analyst writes: “The significantly lower tariffs for pharmaceutical and semiconductor products would give Singapore a competitive advantage and attract more pharmaceutical and semiconductor companies to expand in Singapore.”
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With this, Chen has picked CapitaLand Ascendas REIT(CLAR) as a prime beneficiary of preferential tariffs.
See also: UOBKH says ‘size matters’ on ‘overweight’ data centre REITs, but downgrades MINT to ‘hold’
The REIT has the largest exposure to business park and high-tech properties in Singapore, at 32.6% and 20.4% of portfolio valuation, which benefit from multi-national companies in the pharmaceutical and semiconductor sectors expanding in Singapore.
Overall, CLAR has 29 business park properties and 42 high-tech and industrial buildings in Singapore valued at $5.47 billion and $3.41 billion respectively as of December 2024.
The business park properties had a lower occupancy of 84.8% as of December 2024, while the high-tech buildings had a healthy occupancy of 93.9%.
Meanwhile, technology, logistics and life sciences industries accounted for 65.1% of CLAR’s monthly rental income.
Chen also likes the REIT’s acquisition of 9 Tai Seng Drive (9TSD) due to its attractive net property income (NPI) yield of 7.1% after transaction costs.
The property, he notes, improves CLAR’s pro forma 2024 distribution per unit (DPU) by 1.24%.
He adds: “The data centre market in Singapore is supply constrained and has a tight vacancy of 2%. There is potential for rental uplift as 9TSD is 30% under-rented compared with the current market rent of $390 to $520 per kilo watt. The data centre can also be enhanced by securing higher power capacity.”
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The analyst also estimates a stronger DPU growth of 7% for the REIT in 2026 due to contributions from five development and redevelopment projects.
CLAR has embarked on one development project in the US, Charleston, South Carolina, and four redevelopment projects; Geneo, 27 IBP, 5 Toh Guan Road East and LogisHub at Clementi, worth a total of $775 million, scheduled for completion between 1QFY2025 and 1QFY2028.
With this, Chen has a “buy” call on the REIT at a target price (TP) of $3.58.
Another chosen stock of his is Mapletree Industrial Trust(MINT), which he notes is primarily a play on data centres in North America and Japan, which accounted for 55.6% of its portfolio valuation.
Business parks and high-tech buildings, on the other hand, account for 22.7% of its portfolio valuation.
The REIT has three business park properties in International Business Park and Changi Business Park valued at $533.7 million on aggregate as of March, as well as eight high-tech buildings in Singapore valued at $1.52 billion.
Occupancy for MINT’s business park properties is in-line with the broader market at 80.4%, while occupancy for its high-tech buildings is similarly healthy at 86.4%
In aggregate, business park properties and high-tech buildings accounted for 16.9% of the REIT’s portfolio valuation post-divestment, while flatted factories accounted for 16.5% of portfolio valuation post-divestments.
In Singapore, MINT has entered into an agreement to divest three properties; The Strategy and The Synergy at CBP and two high-tech buildings at Woodlands Central Cluster, for a total consideration of $535.3 million, which is 2.6% above independent valuations.
Chen, who writes that the move is “untimely”, sees that Singapore will account for 44.4% of MINT’s assets under management (AUM) post-divestment.
He adds: “The divestment is expected to reduce pro forma FY2025 DPU by 2.2%. Aggregate leverage is expected to decline from 40.1% to 37.0%.”
As such, Chen has a “buy” call and TP of $2.73 on MINT.
On ESR REIT and AIMS APAC REIT (AA REIT), Chen has no calls, having included the REITs as ones to watch due to their portfolio.
ESR REIT’s three business park properties in Singapore, one at 16 International Business Park and two in Changi Business Park, accounted for 12.9% of its portfolio valuation as of December 2024.
It also has nine hi-specifications industrial buildings, which accounts for 32.3% of portfolio valuation.
In 2024, the REIT reported a net property income (NPI) decline of 17.4% due to the divestments of 12 non-core assets in the FY2023 to FY2024, the decommissioning of its 2 Fishery Port Road asset in Singapore for redevelopment and lastly, dilution from the $300m equity fund raising, where proceeds were used to pay down debt pending deployment.
Meanwhile, the REIT’s sponsor, Hong Kong-based ESR Group, incurred a huge net loss of US$699.8 million ($899.3 million) in 2024.
“It suffered mark-to-market losses from asset and project revaluations, led by a US$320 million hit related to newly-completed properties in China,” writes Chen.
As for AA REIT, he sees that it has one business park property, 1A International Business Park in Singapore with an occupancy of 61.3% as of March 2024.
It also has one high-tech building, 29 Woodlands Industrial Park E1, with an occupancy of 99.8%, with the two properties accounting for 9.8% of AAREIT’s portfolio valuation on aggregate as of March 2024.
Chen writes: “The bulk of AAREIT’s business park properties is in Australia, including Woolworths HQ and Optus Centre , which together accounted for 30.1% of AA REIT’s portfolio valuation.”
Sector catalysts noted by him include the resilient Singapore economy benefitting from low reciprocal tariffs, in particular the pharmaceutical and semiconductor sector, and a limited new supply for the logistics and retail segments in Singapore.
The main risk noted by Chen is the escalation of the Russia-Ukraine war in Europe and Israel-Iran war in the Middle East.
As at 3.27 pm, shares in CLAR, MINT, ESR REIT and AA REIT were trading at $2.60, $1.96, $2.40 and 89 cents respectively.
