On 11 February 2025, Paragon REIT received a privatization offer from Times Properties, a wholly owned subsidiary of Cuscaden Peak Investments, at a 10.1% premium to the counter’s last transacted price.
The reason for the privatization offers revolves around the “low” liquidity and free float as well as the offeror’s intention to conduct major asset enhancement initiatives (AEI), which the offeror believes is “more suitably carried out in a private setting.”
Based on the offeror’s rationale, given that Paragon accounts for 72% of the REIT’s portfolio, any AEI will result in massive disruption in the operating performances, and DPU and hence result in undesirable drawdowns which limits the manager’s ability to maintain the mall’s competitiveness in the long run.
In this article, we’ll examine the REIT market in Singapore and identify the REITs that exhibit similar liquidity constraints and portfolio concentration risk so that investors can have a better sense of the likelihood of future privatization.
Defining Daily Liquidity
To facilitate the analysis, we’ll be quantifying market liquidity based on the following formula:
Daily Liquidity = 30 Day Average Trading Volume in $ / Market Capitalization
This provides us with a sense of the average market depth while accounting for the impact of market capitalization by examining it in a ratio rather than from a nominal figure. (i.e. a $10 billion market capitalization REIT will have a higher trading volume (in $) as compared to a $1 billion market capitalization REIT).
By applying the formula and ranking the 38 S-REITs that REITsavvy tracks in descending order (data as of 12 Feb 2025), the findings are as follows and there are at least 7 S-REITs that trade below Paragon REIT based on daily liquidity which is based on the REIT market capitalisation.
Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 647.67 to 631.70(-2.47%) compared to last month’s update.Singapore REITs index is trading sideway near the support level.
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.
REITs highlighted in orangehave the latest Q4 2024 values, otherwise they have the Q3 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.
FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters.If Lower, it isRed.
Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of February 14th, 2025.
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 remained at 0.88 (Weighted Average: 0.88)
Remained at 0.88 in January 2025.
Singapore Overall REIT sector is slightly undervalued
Most overvalued REITs (based on Price/NAV)
ParkwayLife REIT
1.61
Keppel DC REIT
1.37
Mapletree Industrial Tr
1.17
Capitaland Ascendas REIT
1.16
Paragon REIT
1.06
AIMS APAC REIT
0.99
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
0.31
Acrophyte Hospitality Trust
0.32
Keppel Pacific Oak US REIT
0.33
Lippo Malls Indonesia Retail Trust
0.35
OUE REIT
0.48
Distribution Yields Overview
TTM Distribution Yield increased to 6.15%. (Weighted Average increased slightly to 6.27%)
Increased from 6.08% in January 2025. (Weighted Average was 6.20%)
xx of 38 Singapore REITs have ttm distribution yields of above 7%.
Highest Distribution Yield REITs (ttm)
Acrophyte Hospitality Trust
12.16
IREIT Global
11.92
Stoneweg European REIT
9.29
Elite UK REIT
8.97
Sasseur REIT
8.96
ESR REIT
8.83
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 3.30%. (Weighted Average tightened slightly to 3.92%)
Widened from 3.09% in January 2025. (Weighted Average was 4.00%)
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 decreased slightly to 39.52%. (Weighted Average: 38.26%)
Decreased slightly from 39.60% in January 2025. (Weighted Average: 38.76%)
Gearing Ratios are updated quarterly. Therefore there are no updates this month.
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
56.1
Prime US REIT
47.8
Lippo Malls Indonesia Retail Trust
45.0
Keppel Pacific Oak US REIT
43.7
Acrophyte Hospitality Trust
43.2
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 increased by 1.86% to S$87.81 Billion.
Increased from S$86.21 Billion in January 2025.
Biggest Market Capitalisation REITs (S$m):
Capitaland Integrated Commercial Trust
14377.99
Capitaland Ascendas REIT
11220.00
Mapletree Pan Asia Commercial Trust
6211.40
Mapletree Logistics Tr
6170.76
Mapletree Industrial Tr
5781.44
Keppel DC REIT
4638.90
Smallest Market Capitalisation REITs (S$m):
Acrophyte Hospitality Trust
127.60
Lippo Malls Indonesia Retail Trust
153.94
Manulife US REIT
183.50
Elite UK REIT
190.14
Prime US REIT
222.36
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.
Singapore REITs sector is consolidating at the the support level of about 630 of FTSE ST REIT Index. The US 10Y Risk Free Rate dropped to 4.48%, but this did not correlate to an increase in the S-REITs index. Singapore REITs sector is expected to be muted as long as US 10 Year Risk Free rate stay at current level.
US 10 Year Risk Free Rate
Fundamentally, the S-REIT sector is trading at a 12% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.15%.
According to the current Fed Fund Rate projections from the CME Group, the market expects a 25 basis point cut by end 2025, with a total reduction of 100 basis points cut from the peak of the interest rate cycle in 2024. 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 probably in Q2 or Q3 2025.
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US 10 Year Risk Free Rate
