Singapore REIT Fundamental Analysis Comparison Table – 3 June 2019

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) changed from 869.49  to 858.67 (-1.24%) as compared to last post on Singapore REIT Fundamental Comparison Table on May 5, 2019.

The REIT index is currently facing immediate resistance of 875 (the previous high in 2018) and trading within a falling wedge consolidation range between 848 to 870.  Based on the current chart pattern and and momentum,  the sentiment is BULLISH and the trend for Singapore REIT direction is still UP with a pause. All eyes will be focusing on whether the REIT index can break the 2018 high (875) and 2013 high (892) back in May 2013. Another scenario would be a break down of the 848 immediate support and we will see a larger correction of REIT index, heading towards the 200D SMA support of about 820.

 

Fundamental Analysis of 39 Singapore REITs

The following is the compilation of 39 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. The 2 new IPO ARA US Hospitality Trust and Eagle Hospitality Trust are not included in this table due to insufficient data points.

  • Price/NAV decreases from 1.03 to 1.02 (Singapore Overall REIT sector is slightly over value now).
  • Distribution Yield increases from 6.40% to 6.51% (take note that this is lagging number). About 38.5% of Singapore REITs (15 out of 39) have Distribution Yield > 7%.
  • Gearing Ratio increases from 34.7% to 34.9%. 22 out of 39 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: The limit of gearing ratio for REITs listed in Singapore Stock Exchange is 45%.
  • The most overvalue REIT is Parkway Life (Price/NAV = 1.62), followed by Ascendas REIT (Price/NAV = 1.42), Keppel DC REIT (Price/NAV = 1.49) and Mapletree Industrial Trust (Price/NAV = 1.40).
  • The most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.64), followed by OUE Comm REIT (Price/NAV = 0.68), Lippo Mall Indonesia Retail Trust (Price/NAV = 0.71), Sabana REIT (Price/NAV = 0.75) and Far East Hospitality Trust (Price/NAV = 0.73).
  • The Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (9.19%), followed by First REIT (8.60%), SoilBuild BizREIT (8.67%),  Sasseur REIT (8.75%)  and Cromwell European REIT (8.20%).
  • The Highest Gearing Ratio are ESR REIT (42.0%), Far East HTrust (39.9%) and OUE Comm REIT (39.4%) and SoilBuild BizREIT  (39.3%)
  • Top 5 REITs with biggest market capitalisation are Ascendas REIT ($9.0B), CapitaMall Trust ($8.9B), Capitaland Commercial Trust ($7.2B), Mapletree Commercial Trust ($5.5B) and Mapletree Logistic Trust ($5.3B)
  • The bottom 3 REITs with smallest market capitalisation are BHG Retail REIT ($359M), Sabana REIT ($442M) and iREIT Global REIT ($473M)

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation

  • 1 month increases from 1.82283% to 1.88538%
  • 3 month increases from 1.94507% to 2.00338%
  • 6 month increases from 2.00014% to 2.06215%
  • 12 month increases from 2.12550% to 2.18675%

Based on current probability of Fed Rate Monitor, the US Fed Reserve reduce the interest rate by 50bps to  2.00% in 2019. Probability of keeping the interest rate at 2.25-2.50% is only 3.2%! This means US Fed Reserve will cut the interest rate by end of this year! This is a big change from last month.

Summary

Fundamentally the whole Singapore REITs is slightly over value now. The big cap REITs are getting expensive and the distribution yield are not so attractive currently. Most of the DPU yield for big cap REIT is below 5% now. The yield spread between big cap and small cap REIT remains wide. This indicates value picks only in small and medium cap REITs.  For reference, 10-years risk free yield rate for latest Singapore Saving Bonds is 2.16%.

Yield spread (reference to 10 year Singapore government bond of 2.062%) has widened from 4.15% to 4.448%. DPU yield for a number of small and mid-cap REITs are still very attractive  (>8%) at the moment.  It is expected the next move would be on small and medium size REITs due to higher risk premium compared to big cap REITs.

Technically, the REIT index is still trading in a bullish territory and have been very defensive compared to STI. With the potential rate cut in 2019, don’t be surprise REIT index to break the resistance (875 and 892) to move higher.

 

 

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Eagle Hospitality Trust IPO Prospectus & Summary

 

 

Eagle Hospitality Trust

EHT is a hospitality stapled group comprising EH-REIT and EH-BT.

EH-REIT is a Singapore-based real estate investment trust (“REIT”) established with the principal
investment strategy of investing on a long-term basis, directly or indirectly, in a diversified portfolio
of income-producing real estate which is used primarily for hospitality and/or hospitality-related
purposes, as well as real estate-related assets in connection with the foregoing, with an initial
focus on the US.

For the purposes of this Prospectus, real estate used for “hospitality” purposes includes hotels,
serviced residences, resorts and other lodging facilities, whether in existence by themselves as
a whole or as part of larger mixed-use developments, which may include commercial,
entertainment, retail and leisure facilities.

The REIT Manager is indirectly 51% owned by Howard Wu and 49% owned by Taylor Woods.
Howard Wu and Taylor Woods are the co-founders of the Sponsor (collectively, the “Founders”
and each, a “Founder”) and they each own 50% of the common equity interests in the Sponsor.
EH-BT is a Singapore-based business trust which will be dormant as at the Listing Date. The
Trustee-Manager is indirectly 51% owned by Howard Wu and 49% owned by Taylor Woods.
EHT is a US hospitality specialist with an invested Sponsor and a portfolio of full service hotels
in the top US markets.

See related news below:

Eagle Hospitality Trust prices IPO at US$0.78 per stapled security

  • Type = US Hospitality Sector
  • Sponsor = Urban Commons, LLC (Owners Howard Wu & Taylor Woods aggregate 15.2% of Eagle Hospitality Trust)
  • REIT Manager: Howard Wu (51%) & Taylor Woods (49%)
  • Total Unit Offered = 580,558,000
  • Portfolio = 18 Hotel in US (across 21 states, 5420 rooms)
  • Portfolio Size = US$1.27 Billion
  • IPO Offer Price = US$0.78
  • NAV per unit = US$0.88
  • Price / NAV = 0.8863
  • Distribution Yield = 8.2% (2019), 8.4% (2020)
  • Distribution Policy = 100% for 2019. 90% for 2020. Semi Annual Payout.
  • Occupancy Rate = 73.6% (2018), 78.5% (2019 Forecast), 76.8% (2020 Forecast)
  • Gearing Ratio = 38.0%
  • WADM = 4.2 Years
  • Offer Closing Date: May 22, 2019 at 12:00pm
  • Listing Date: May 24, 2019
  • Eagle Hospitality Trust IPO Prospectus

 

Compare to other Singapore REITs here.

Singapore REIT Bubble Charts May 2019

Bubble charts derived from May 5, 2019 Singapore REITs Fundamental Comparison Table. No significant changes compared to last Bubble Charts.

(1) Big cap REIT remains expensive and value picks remains at small and medium cap REIT. Note: Distribution yield is lagging.

(2) There are no significant changes in gearing ratio.

These Bubble Charts are used to show the “relative” position compare to other Singapore REITs.

Two visual bubble charts to pick and avoid:

  1. Undervalue Singapore REITs with High Distribution Yield** (Value Pick)
  2. Overvalue Singapore REITs with High Gearing Ratio (Risk Avoidance)

** Distribution Yield are lagging.

Compared to previous Singapore REIT Bubble Charts here.

 

Disclaimer: The analysis is for Author own use and NOT to be used as Buy / Sell recommendation. Get a proper training on “How to use this Singapore REIT Bubble Charts?” here.

 

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