In the first week of October, I’ll be conducting a webinar as well as a physical seminar.
Navigating Volatile Markets to Beat Inflation (Physical Seminar 1st October 2022)
Worried about the high inflation rates? Join us as we share tips on how to beat inflation, and our inflation outlook for the rest of the year and beyond. You will learn ways to edit your investment portfolio to beat the high inflation rates, in a SAFE way.
As this is a physcial seminar, seats are limited so sign up today.
Date: 1st October 2022 (Saturday)
Time: 10am – 12pm
Venue: Gateway West (150 Beach Road, #12-01/08, Singapore 189720)
How to Build a REIT Portfolio into a Retirement Plan? (SGX Academy Webinar, 5th October 2022)
Want to learn the fundamentals of what REITs are, and how can this asset class complement your investment portfolio? Why should you invest in this asset class with an average p.a. yield of 5-7% and $100 minimum investment amount? Tune in to learn how to kickstart/improve your REITs investing!
Participants will have an insight on the characteristics of REITs as asset class, and able to explore the benefits and sustainability of REIT in building their retirement portfolio.
Participants will appreciate the important factors to consider when building their retirement portfolio to minimise the investment risks.
Participants will be guided to construct a diversified portfolio to attain their retirement objectives.
Kenny Loh is a Associate 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
Back in 17th July 2002, CapitaMall Trust was listed on the Singapore exchange. Today, there are 38 S-REITs, with a combined market cap of over S$100 Billion.
Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 828.74 to 792.62(4.36%)compared to last month’s update. The REIT Index broke the 800 psychological support and current testing the trend support at about 792. The 20-day and 50-day Simple Moving Average (20 SMA and 50 SMA) are about to crossover, the 20 SMA dropping sharply in the past month. The REIT Index failed to break the 200 SMA Resistance in August, and is now on a short-term downtrend.
Support Lines: Blue
Resistance Lines: Red
Short-term direction: Down
Medium-term direction: Down
Long-term direction: Sideways
Immediate Support at 792 (Blue Line)
Immediate Resistance at 200 SMA
Technically, FTSE ST REIT Index is currently at a very crucial support level at 792. Breaking this support will start the bear trend for Singapore REIT sector. If the REIT index is able to rebound from this level, it is expected the index will have short term bullish momentum towards 830 (200D SMA resistance).
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 there are lagging indicators.
This REIT table takes into account the dividend cuts due to the COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower for more affected REITs.
All REITs are now updated with the latestQ2 2022 business updates/earnings.
Since MPACT started trading, values shown below (except price and market cap) are of MCT.
FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters.If Lower, it isRed.
Most REITs are green since it is compared to FY20/21 as the base (during the pandemic)
Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of September 3rd, 2022
Digital Core REIT: Yield calculated from IPO Prospectus.
Daiwa House Logistics Trust: Yield calculated from trailing six months distribution.
Gearing (%): Leverage Ratio.
Price/NAV: Price to Book Value. Formula: Current Price (as of September 3rd, 2022) over Net Asset Value per Unit.
Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs trading in USD is referenced to US Gov Bond Yield, everything else is referenced to SG Gov Bond Yield.
Price/NAV Ratios Overview
Price/NAV decreased to 0.91.
Decreased from 0.95 from August 2022.
Singapore Overall REIT sector is undervalued now.
Take note that NAV is adjusted upwards for some REITs due to pandemic recovery.
Most overvalued REITs (based on Price/NAV)
Parkway Life REIT (Price/NAV = 1.99)
Keppel DC REIT (Price/NAV = 1.39)
Mapletree Industrial Trust (Price/NAV = 1.35)
Ascendas REIT (Price/NAV = 1.18)
Mapletree Logistics Trust (Price/NAV = 1.13)
ESR-LOGOS REIT (Price/NAV = 1.12)
No change to the Top 6 compared to last month’s update.
Most undervalued REITs (based on Price/NAV)
Lippo Malls Indonesia Retail Trust (Price/NAV=0.46)
BHG Retail REIT (Price/NAV = 0.57)
ARA Hospitality Trust (Price/NAV = 0.63)
EC World REIT (Price/NAV = 0.65)
OUE Commercial REIT (Price/NAV = 0.66)
IREIT Global (Price/NAV = 0.67)
Distribution Yields Overview
TTM Distribution Yield Increased to 6.58%.
Increased from 6.32% in August 2022.
15 of 40 Singapore REITs have distribution yields of above 7%. (1 more than last month’s update)
Do take note that these yield numbers are based on current prices taking into account the delayed distribution/dividend cuts due to COVID-19, and economic recovery. The recent sell-off contributed to the increase in average yield.
Highest Distribution Yield REITs (ttm)
Prime US REIT (11.15%)
EC World REIT (10.85%)
Manulife US REIT (10.48%)
United Hampshire REIT (9.77%)
Keppel Pacific Oak US REIT (9.47%)
First REIT (9.39%)
Reminder that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
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 tightened to 3.50%.
Decreased from 3.67% in August 2022.
Gearing Ratios Overview
Gearing Ratio increased slightly to 36.68%.
Decreased from 36.52% in August 2022.
Gearing Ratios are updated quarterly. Therefore some of the following REITs have updated gearing ratios compared to last month.
Highest Gearing Ratio REITs
Lippo Malls Indonesia Retail Trust (43.9%)
ARA Hospitality Trust (43.5%)
Suntec REIT (43.1%)
Manulife US REIT (42.4%)
Elite Commercial REIT (41.9%)
ESR-LOGOS REIT (40.6%)
Market Capitalisation Overview
Total Singapore REIT Market Capitalisation decreased by 4.69% to S$103.51 Billion.
Decreased from S$108.60 Billion in August 2022.
Biggest Market Capitalisation REITs:
Capitaland Integrated Commercial Trust ($13.52B)
Ascendas REIT ($11.85B)
Mapletree Pan Asia Commercial Trust ($9.58B)
Mapletree Logistics Trust ($7.95B)
Mapletree Industrial Trust ($6.83B)
Frasers Logistics & Commercial Trust ($4.99B)
MPACT (formerly MCT) moved from 5th to 3rd rank since its merger with MNACT.
Smallest Market Capitalisation REITs:
BHG Retail REIT ($257M)
Lippo Malls Indonesia Retail Trust ($308M)
ARA Hospitality Trust ($363M)
EC World REIT ($445M)
Elite Commercial REIT ($460M)
United Hampshire REIT ($479M)
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, here’s a subsidised 2-day course with all you need to know about REITs and how to start investing in them.
Top 20 Worst Performers of the Month in August 2022
S-REITs Earnings Season for the Period Ending 30 June 2022 has wrapped up
All S-REITs have finished reporting their earnings. Of the 37 REITs who reported their earnings for Q1 and/or Q2 (taking most recent DPU) (excl. DC REIT), the overview on Q-o-Q or H-o-H DPU change are as follows:
16 REITs have reported an increase in DPU,
7 REITs have reported no change in DPU, and
14 REITs have reported a decrease in DPU.
S-REITs are now 20 years old!
THE SMART INVESTOR: Time flies, and in the blink of an eye, it’s been 20 years since the first Singapore REIT (S-REIT) was listed on our shores.
The REIT Association of Singapore (Reitas) organised an event to celebrate this milestone, and Singapore Exchange’s (SGX: S68) CEO Loh Boon Chye noted that the S-REIT sector continues to be one of the fastest-growing in Asia.
S-REITs form the second-largest REIT market outside of Japan, with a total of 43 REITs (and Business Trusts) with a market value of more than S$111 billion, making up close to 12% of the market capitalisation of all SGX stocks.
The very first REIT, CapitaMall Trust, was listed on the Singapore market back on 17 July 2002.
It was later merged with CapitaCommercial Trust to form CapitaLand Integrated Commercial Trust (SGX: C38U). Read More
Lendlease Global Commercial REIT first S-REIT to attain net-zero carbon target
EDGEPROP: Lendlease Global Commercial REIT (LREIT) has achieved its net-zero carbon target ahead of its original target through energy-efficiency initiatives and reducing energy consumption within its Singapore assets, it announced on Aug 29.
“LREIT is poised to make strides in our decarbonisation journey to achieve absolute zero carbon by 2040, as the first S-REIT to attain net-zero carbon status,” says Kelvin Chow, the CEO of LREIT’s manager. “Besides adopting energy-efficiency measures, we are actively exploring new ways to reduce our energy consumption.” Read More
Summary
Fundamentally, the whole Singapore REITs landscape is undervalued based on the average Price/NAV value of the S-REITs. Below is the market cap heat map for the past 1 month. Generally, S-REITs in the past month have decreased in market cap. August has been a bearish month for S-REITs.
Yield spread (in reference to the 10 year Singapore government bond of 3.07% as of 3rd September 2022) tightened from 3.67% to 3.50%.The S-REIT Average Yield increased from6.32% to 6.58%,while the increase in the Government Bond Yields more than offsets this Average S-REIT Yield increase. This resulted in the tightening of yield spread. The yield of the REITs sector needs to increase to maintain the average yield spread of 4%. Despite the bearish month of August, S-REITs have been resilient and have one of the highest risk-adjusted dividend yields compared to other stock exchanges.
Technically, FTSE ST REIT Index is currently at a very crucial support level at 792. Breaking this support will start the bear trend for Singapore REIT sector. If the REIT index is able to rebound from this level, it is expected the index will have short term bullish momentum towards 830 (200D SMA resistance).
Note: This above analysis is for my own personal research and it is NOT a buy or sell recommendation. Investors who would like to leverage my extensive research and years of Singapore REIT investing experience can approach me separately for a REIT Portfolio Consultation.
Kenny Loh is an Associate 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
Investing is a journey, not a day trip, so we need to prepare ourselves for the long haul. In our previous article, ‘What are REITs? Are they just for retirees?’, we covered some key characteristics of a REIT. In this article, we will be sharing how to start investing. Here are some questions individuals should ask themselves before investing:
Have I already set aside a rainy-day fund? (About six months’ worth of living expenses is a good gauge.)
Am I making my money work hard enough for me to beat inflation?
What is my investment horizon; can I set aside some money to invest?
Investing should not be a daunting affair or complex matter. In this article, we want to provide some easy steps on how to start investing.
Open either a CDP account or custodian account
If you are located in Singapore, you need either a Central Depository (CDP) account or Custodian account before you can invest.
A CDP account, which is operated by the Singapore Exchange (SGX), acts as a safe for all your stocks and bonds purchased. Every time you invest in stocks and bonds, they are deposited into your personal CDP account. The advantage of going for a CDP account is that you are the legal owner of the stock you purchase and will enjoy direct interaction with the company (e.g., receiving invites to the annual general meetings, entitlement to voting rights, etc). However, the CDP clearing fee and SGX trading fee are slightly higher compared to custodian fees.
Once you have opened your CDP account, you can log in to the SGX Investor Portal via SingPass to view your stock portfolio and account statements.
Conversely, if you want to invest in overseas stocks, you will have to go for a custodian account instead, as the option of storing investments in CDP accounts is only applicable for Singapore-listed securities. Custodian fees tend to be lower than CDP and SGX clearing and trading fees, and custodians will help to pass on communication from the company to investors while representing them at AGMs and other investor meetings.
A number of brokerages today operate on a custodial basis. This means that the broker will own the shares on behalf of investors. Some examples of such brokers include moomoo, Tiger Brokers, Interactive Brokers, Saxo, Standard Chartered and FSMOne.
Open Your Brokerage Account
A brokerage account allows you to buy and sell investment products such as stocks, REITs, exchange-traded funds (ETFs) and certain bonds.
When selecting your brokerage, consider the following:
Market access Does it allow you to invest in foreign exchanges? If you are looking to invest in overseas stocks, this would be a key factor of consideration.
Trading /Commission fees How do they compare in terms of minimum fees and trading fees? Here is a helpful comparison of brokerage fees compiled by SingSaver. Also consider which brokerage type would suit your needs best – cash accounts, pre-funded accounts, or broker-assisted trading accounts?
Other factors to consider when choosing your brokerage account include the user-friendliness of the web/mobile app interface, availability of useful charting tools, speed of live information, and access to analyst reports and other investor education resources.
There is no limit to how many brokerage accounts you can have with different brokerage houses, so it is possible to test several before settling on one as your primary account.
In the next article, we will discuss the importance of portfolio diversification, and how you can go about doing so.
Disclaimer: This article is for informational purposes only and shall not be construed as financial advice or an offer, invitation or solicitation of any offer to purchase or subscribe for any securities of Manulife US REIT in Singapore or any other jurisdiction nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. You should always do your due diligence and seek professional advice before making any investment decisions. None of the information presented are intended to form the basis for any investment decision, and no specific recommendations are intended.
This article first ran on Manulife US REIT’s thought leadership column, Viewpoints, which publishes regular content on the U.S. economy and the office sector. Follow MUST on LinkedIn for all the latest updates!
Kenny Loh is an Associate 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.
