Singapore REIT Fundamental Analysis Comparison Table – 8 October 2019

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Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) is currently trading in a Symmetrial Triangle consolidation pattern on an uptrend. The REIT index has little change from 927.94 to 929.69 (+0.19%). So far 50D SMA proves to be a good support.  Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Sep 6, 2019.

Based on the current chart pattern and and momentum,  the sentiment is BULLISH and the trend for Singapore REIT direction is still UPBreaking out from a symmetrical triangle will send the REIT index to march towards the minimum target of 970.

 

Fundamental Analysis of 41 Singapore REITs

The following is the compilation of 41 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. DPU Yield for Eagle Hospitality Trust and Prime US REIT are  projection based on the IPO prospectus.  OUE Hospitality Trust is removed after merged into OUE Commercial REIT. Lendlease Global Commercial REIT is not included in this table.

  • Price/NAV increases from 1.06 to 1.07 (Singapore Overall REIT sector is over value now).
  • Distribution Yield reduced from 6.37% to 6.27% (take note that this is lagging number). About 29.3% of Singapore REITs (12 out of 41) have Distribution Yield > 7%.
  • Gearing Ratio reduced from 34.7% to 34.6%.  23 out of 41 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 Keppel DC REIT (Price/NAV = 1.80), followed by Parkway Life (Price/NAV = 1.71), Ascendas REIT (Price/NAV = 1.50), Mapletree Industrial Trust (Price/NAV = 1.60), Mapletree Logistic Trust (Price/NAV = 1.38), Frasers Logistic & Industrial Trust (Price/NAV = 1.38), Frasers Centrepoint Trust (Price/NAV=1.30) and Mapletree Commercial Trust (Price/NAV = 1.47)
  • The most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.53), followed by OUE Comm REIT (Price/NAV = 0.75), Far East Hospitality Trust (Price/NAV = 0.79), Lippo Malls Indonesia Retail Trust (Price/NAV = 0.77) and Eagle Hospitality Trust (Price/NAV = 0.77)
  • The Highest Distribution Yield (TTM) is SoilBuild BizREIT (9.66%), followed by Eagle HT (9.41%), Sasseur REIT (8.56%), EC World REIT (8.42%), Lippo Mall Indonesia Retail Trust (8.43%),  First REIT (8.43%) and Cache Logistic Trust (8.02%).
  • The Highest Gearing Ratio are Far East HTrust (39.8%), ESR REIT (39%),  OUE Comm REIT (39.3%) and SoilBuild BizREIT  (39.4%)
  • Top 5 REITs with biggest market capitalisation are Ascendas REIT ($9.59B), CapitaMall Trust ($9.51B), Capitaland Commercial Trust ($7.69B), Mapletree Commercial Trust ($6.77B) and Mapletree Logistic Trust ($5.85B)
  • The bottom 3 REITs with smallest market capitalisation are BHG Retail REIT ($345M), Sabana REIT ($469M) and iREIT Global REIT ($490M)

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 Workshop here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

 

  • 1 month decreases from 1.87916% to 1.87633%
  • 3 month increases from 1.87933% to 1.87958%
  • 6 month stays at 1.93842%
  • 12 month stays at 2.12400%

 

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 not attractive historically and most of the DPU yield for big cap REIT is below 5% now. This is the first time in my REIT investing journey seeing the distribution yield for Singapore REITs such as Mapletree Commercial Trust and Keppel DC REIT drop below 4%! However, the yield remains attractive compared to other fixed income asset classes like corporate bonds and government bonds.

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 1.657%) has tightened from 4.665% to 4.613%.  The risk premium for small cap REIT is very attractive as compared to big cap REITs.

 

Technically, the REIT index continues the bullish uptrend and currently taking a pause. REIT index continues to outperform STI and the financial sectors due to the following 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.

 

My next Singapore REIT investing course is planned on Nov 30, 2019 (last class in 2019). Registration detail can be found at following link. http://mystocksinvesting.com/course/singapore-reits-investing/

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