Singapore REIT Fundamental Analysis Comparison Table – 12 August 2019

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) broke out from the 10 years resistance at 875 with significant increase in trading volume. The REIT index is currently retracing from the high 941.77 to  895.14 (-4.95%). Next immediate support zone is between 870 to 875 for a healthy correction.  Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on July 1, 2019.

Based on the current chart pattern and and momentum,  the sentiment is BULLISH and the trend for Singapore REIT direction is still UPThe recent selling can be a healthy correction before the REIT index can move higher.

 

Fundamental Analysis of 42 Singapore REITs

The following is the compilation of 42 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. Added 3 new IPO (ARA US Hospitality Trust, Eagle Hospitality Trust and Prime US REIT) in this month table. Do take note that distribution yield for these 3 newly IPO are just a projection based on the IPO prospectus.

  • Price/NAV decreases from 1.07 to 1.05 (Singapore Overall REIT sector is over value now).
  • Distribution Yield increases from 6.22% to 6.37% (take note that this is lagging number). About 33.3% of Singapore REITs (14 out of 42) have Distribution Yield > 7%.
  • Gearing Ratio at 34.7%. 24 out of 42 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: The current limit of gearing ratio for REITs listed in Singapore Stock Exchange is 45% but there is a consultation paper by SGX to review the potential increase to 50-55% limit.
  • The most overvalue REIT is Parkway Life (Price/NAV = 1.63), followed by Keppel DC REIT (Price/NAV = 1.58), Ascendas REIT (Price/NAV = 1.50), Mapletree Industrial Trust (Price/NAV = 1.47), Mapletree Logistic Trust (Price/NAV = 1.30), Frasers Logistic & Industrial Trust (Price/NAV = 1.30), CapitaMall Trust (Price/NAV = 1.28) and Mapletree Commercial Trust (Price/NAV = 1.28)
  • The most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.59), followed by OUE Comm REIT (Price/NAV = 0.75) and Far East Hospitality Trust (Price/NAV = 0.75).
  • The Highest Distribution Yield (TTM) is Eagle HT (9.0%), followed by SoilBuild BizREIT (8.67%), Sasseur REIT (8.45%), EC World REIT (8.42%), Lippo Mall Indonesia Retail Trust (8.26%),  First REIT (8.11%) ARA HT (8.04%).
  • The Highest Gearing Ratio are ESR REIT (39%), Far East HTrust (39.8%) and OUE Comm REIT (39.3%) and SoilBuild BizREIT  (39.4%)
  • Top 5 REITs with biggest market capitalisation are Ascendas REIT ($9.56B), CapitaMall Trust ($9.63B), Capitaland Commercial Trust ($7.65B), Mapletree Commercial Trust ($5.88B) and Mapletree Logistic Trust ($5.52B)
  • The bottom 3 REITs with smallest market capitalisation are BHG Retail REIT ($350M), Sabana REIT ($474M) and iREIT Global REIT ($499M)

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 decreases from 1.88450% to 1.88250%
  • 3 month decreases from 2.00192% to 1.99783%
  • 6 month decreases from 2.06017% to 2.05792%
  • 12 month decreases from 2.18675% to 2.18500%

Based on current probability of Fed Rate Monitor,  the probability of another 25 bps cut in Sept is 80%.

 

Summary

Fundamentally the whole Singapore REITs is over value now based on simple average on the Price/NAV. The big cap REITs are getting quite expensive and the distribution yield are still not so attractive currently although those REITs are going through minor correction now. 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.

Yield spread (reference to 10 year Singapore government bond of 1.735%) has widened from 4.205% to 4.635%.  DPU yield for a number of small and mid-cap REITs are still very attractive  (>7%) although price has started moving north. The risk premium remains attractive as compared to big cap REITs.

Technically, the REIT index is currently going through correction but still trading in a bullish up trend. This bullish sentiment may continue due to the 3 macro factors (1) low interest rate environment (2) potential relax of gearing ratio to 50-55% limit (3) TINA (There Is No Alternative) for other high yield asset classes. The positive sentiment may entice Singapore REITs to take on more debt to grow the current portfolio.

You can catch me at the coming Invest Fair 2019 as I will be sharing my view on the current Singapore REIT market. You can also catch me in between the break if you want to ask me any questions regarding Financial Planning or Investment. You can check out the registration detail here. Kenny Loh @ InvestFair2019

 

If you need an independent professional review on your current REIT portfolio and need any recommendation, you may engage me in the REIT portfolio Advisory. REITs Portfolio Advisory.  http://mystocksinvesting.com/course/private-portfolio-review/

 

 

Kenny Loh at Invest Fair 2019

I was invited as a panelist in Invest Fair 2017 sharing on a topic “Investing in 20, 30 and 40”.

In 2018 Invest Fair, I was invited as speaker to share “To Ace the REITs Race: Comprehensive Market Review of S-REITs and its Risks & Opportunities Outlook for 2018”

 

In 2019 Invest Fair, it was an honor to be invited as panelist and also speaker to share about different topics on Aug 18 (Sunday).

Please refer to the Invest Fair 2019 Seminar Schedule here.

 

12.30pm – 1:30pm (18 Aug 2019, Sunday): Invest with Confidence at Seminar Room 3.

  • I will share my strategy how to invest with confidence by building a diversified portfolio. There are important tips that investors can use it immediately on their own portfolio.
  • Suitable to all investors (from newbie investors to accredited investors)

 

4:00pm – 4:30pm (18 Aug 2019, Sunday): REIT Rush 2019 – is this still cheap to buy? at Seminar Room 4.

  • I will address the most common pressing questions as follow:
    • Is it good time to sell REITs?
    • Is it good time to buy REITs?
    • 3 Macro events which affect REITs moving forward.
    • What should investors do to get prepared for the events?
  • Suitable to newbie investors who are new to REITs, and current REIT investors.

 

Hurry up! Users who register before 15 August will receive a complimentary eBook by the organiser ShareInvestor. This ebook features 5 stocks based on their investing personality.

 

Event details
Date : 17th (Saturday) and 18th (Sunday) August 2019
Time : 10am – 7pm (Saturday), 11am – 7pm (Sunday)
Venue : Suntec Exhibition and Convention Centre Hall 401 – 402
Admission : FREE
Website : http://www.investfair.com.sg

 

 

Can You Use Debt to Build Wealth?

This article originally appeared on Payment1.com

 

The short answer is YES. You definitely can. It all depends on what kind of debt, and how smart you are about using the money you borrowed, and how diligent you are at paying it off. So now you may be asking, if debt can be used to build wealth, how do I do it?

Source

 

First off, you need to know about the two kinds of debt: Good Debt and Bad Debt. Good debt is a kind of debt that has low interest and is used to increase your value in the long run. Bad debt, on the other hand, has atrociously high interest and depreciates in value fairly quickly. Examples of good debt would be student loans and small business loans. Bad debt would be payday loans and credit card debt.

 

So if you really want to start getting a lot of money using loan money, you need to make sure it’s the good kind of debt. That part is simple. Now let’s get to the hows.

 

Let’s start with small business loans and the idea of leverage. You can take out a small business loan to help you improve your business. The more you invest in yourself and your business, the greater your chances are of increasing the flow of your income. You can use your small business loan to increase your inventory, or add a branch or service to the current ones you already have. Using loan money as financial leverage to increase your cash flow is a good idea. If you don’t have a business, you can always get a small personal loan and then start a business or invest in educating yourself about a particular business or skill. The more you invest in yourself, the bigger your value will be.

 

But what if you already have bad debt? Would this affect your ability to build wealth using debt? It would, but perhaps not as much as you might think it will. For example, you have several credit card debts and they are growing by the month. You struggle to pay off even just the minimum and building wealth is beginning to look like a pipe dream. You can try doing debt consolidation. What this does is lumping all of your debt into one big debt with a lower interest. This way, you don’t owe several banks different amounts of debt with various interest rates.

 

In order for you to be able to build wealth, using debt or not, the very first step is to get rid of, or to manage your bad debt. Once you get that squared away, you can start building your wealth. It is a good thing to remember to always live within your means. And the simple math of income being greater than living expenses should always be something you live by.

 

Which leads us to the next tip: Reduce your living expenses. The greater the difference is between your expenses versus your income, the more money you have to use as an investment. And perhaps, the best advice one could give when it comes to finance is this: always pay your debt on time and if at all possible, always pay in full.