Technical Analysis of FTSE ST REIT Index (FSTAS351020)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 700.03 to 649.94 (-7.15%) compared to last month’s update. Singapore REITs is currently going through a correction, moving towards a  support zone at about 630-640.

• Short-term direction: Down
• Medium-term direction: Down
• Long-term direction: Sideways
• Immediate Support: Blue Support Line
• Immediate Resistance: 200D SMA

FTSE REIT Index Chart (2 years)

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on October 12th, 2024.

Fundamental Analysis of 38 Singapore REITs

The following is the compilation of 38 Singapore REITs with colour-coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

• The Financial Ratios are based on past data and these are lagging indicators.
• All REITs have the latest Q2 2024 values.
• I have introduced weighted average (weighted by market cap) to the financial ratios, in addition to the existing simple average ratios. This is another perspective where smaller market cap REITs do not disproportionately affect the average ratios.

Data from REITsavvy Screener. https://screener.reitsavvy.com/

What does each Column mean?

• FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters. If Lower, it is Red.

• Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of November 9th, 2024.

• Gearing (%): Leverage Ratio.

• Price/NAV: Price to Book Value. Formula: Current Price over Net Asset Value per Unit.

• Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs are referenced to SG Gov Bond Yield.

As of May 2024, all REITs’ Yield Spread will be referenced to SG Gov Bond Yields, regardless of trading currency.

Price/NAV Ratios Overview

• Price/NAV decreased to 0.87 (Weighted Average: 0.87)
  • Decreased from 0.91 in October 2024.
  • Singapore Overall REIT sector is slightly undervalued

• Most overvalued REITs (based on Price/NAV)
  

  Keppel DC REIT	1.58
  ParkwayLife REIT	1.56
  Mapletree Industrial Tr	1.23
  Capitaland Ascendas REIT	1.19
  AIMS APAC REIT	0.97
  Mapletree Logistics Tr	0.96

  EC World REIT is currently suspended, however at current Price and NAV/Unit values it has a value of 4.67 (N.M)

• Most undervalued REITs (based on Price/NAV)
  

  Manulife US REIT	0.29
  Prime US REIT	0.30
  Acrophyte Hospitality Trust	0.31
  Keppel Pacific Oak US REIT	0.32
  Lippo Malls Indonesia Retail Trust	0.39
  OUE REIT	0.43

Distribution Yields Overview

• TTM Distribution Yield increased to 6.50%. (Weighted Average increased to 6.25%)    
  • Increased from 6.23% in October 2024. (Weighted Average was 5.91%)
  • 15 of 38 Singapore REITs have ttm distribution yields of above 7%.

• Highest Distribution Yield REITs (ttm)
  

  Acrophyte Hospitality Trust	12.45
  IREIT Global	11.49
  EC World REIT	9.24
  First REIT	9.23
  Elite UK REIT	9.10
  Cromwell European REIT	9.01

  Reminder that these yield numbers are based on current prices. 

  • Some REITs opted for semi-annual reporting and thus no quarterly DPU was announced.
  • A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.

• Yield Spread widened to 3.69%. (Weighted Average remained similar at 4.02%)     
  • Widened from 3.40% in October 2024. (Weighted Average was 4.01%)
  • From May 2024 onwards, all my yield spread measurements are now in relation to SG Gov Bond Yields, no longer a mix with US Gov Bond Yields.

Gearing Ratios Overview

• Gearing Ratio increased to 39.74%. (Weighted Average: 38.69%)
  • Increased from 39.12% in October 2024. (Weighted Average: 38.28%)  
  • Gearing Ratios are updated quarterly. 31 of 37 REITs have their gearing ratios updated for 3Q 2024.
  • S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.

• Highest Gearing Ratio REITs
  

  Manulife US REIT	58.2
  EC World REIT	57.9
  Prime US REIT	48.1
  Elite UK REIT	45.1
  Lippo Malls Indonesia Retail Trust	45.0
  Acrophyte Hospitality Trust	43.5

  MUST and EC World REIT’s gearing ratio has exceeded MAS’s gearing limit of 50%. However, the aggregate leverage limit is not considered to be breached if exceeding the limit is due to circumstances beyond the control of the REIT Manager.

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation decreased by 6.15% to S$86.77 Billion.
  • Decreased from S$92.46 Billion in October 2024.

• Biggest Market Capitalisation REITs (S$m):
  

  Capitaland Integrated Commercial Trust	13265.98
  Capitaland Ascendas REIT	11476.17
  Mapletree Pan Asia Commercial Trust	6523.64
  Mapletree Logistics Tr	6458.88
  Mapletree Industrial Tr	6000.84
  Frasers Centrepoint Trust	3834.93

• Smallest Market Capitalisation REITs (S$m):
  

  Acrophyte Hospitality Trust	124.70
  Lippo Malls Indonesia Retail Trust	169.33
  Manulife US REIT	178.00
  Elite UK REIT	178.23
  Prime US REIT	214.51
  EC World REIT	226.76

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. If you want to know more about investing in REITs, scroll down for more information on the REITs courses.

Top 20 Best/Worst Performers of October 2024

Source: https://screener.reitsavvy.com/

SG 10 Year Government Bond Yield

• SG 10 Year: 2.82% (remained at 2.82%)

Summary

Singapore REITs is currently having a pullback due a spike in US 10 years risk free rate to 4.3% (from ~3.8% early October) as the market fears the return of inflation with Trump 2.0 tariff policy.   

Fundamentally, the S-REIT sector is trading at a 13% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.50%. 

According to the current Fed Fund Rate projections from the CME Group, the market expect another 25 basis point cut by end 2024, with a total reduction of about 100 basis points  cut from the peak of the interest rate cycle. The cut in interest rate will help to boost the DPU of the REITs which have shorter debt maturity profile and higher percentage of floating rate. However, the impact will only be reflected in the financial statement of the next 1 to 2 quarter. The current weakness of the S-REIT sector will continue to be shadowed by the US 10 Year Risk Free rate which have has very strong inversed correlation with the REIT index.

US 10 Year Risk Free Rate

Kenny Loh is a Wealth Advisory Director and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement