Singapore REITs Monthly Update (May 4th, 2024)
Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 666.29 to 632.65 (5.04%) compared to last month’s update. The REIT index is now trading in a downward parallel channel, breaking the 20D SMA support again (now turned resistance). The new support is now the bottom line of the parallel channel, followed by the 591 support (low during the March 2020 crash).
- Short-term direction: Down
- Medium-term direction: Down
- Long-term direction: Down
- Immediate Support at 591
- Immediate Resistance at 20D SMA, 50D SMA
FTSE REIT Index Chart (1.5 years)
FTSE REIT Index Chart (5 years)
Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on April 7th, 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.
- REITs with yellow highlights have the latest Q1 2024 values, other REITs have Q4 2023 update 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 May 3rd, 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 0.78 (Weighted Average: 0.78)
- Decreased from 0.80 in April 2024.
- Singapore Overall REIT sector is undervalued now.
- Price/NAV increased due to NAV trending downwards from the latest Q4 2023 update.
- Most overvalued REITs (based on Price/NAV)
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EC World REIT 2.33 ParkwayLife REIT 1.52 Keppel DC REIT 1.25 Mapletree Industrial Tr 1.24 Capitaland Ascendas REIT 1.16 Mapletree Logistics Tr 0.98 - Only 5 REITs are overvalued now based on Price/NAV value.
- EC World REIT has its NAV/Unit dropped from 0.75 to 0.12 as of their latest update. This caused its Price/NAV to skyrocket to 2.33. Also it is currently suspended.
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- Most undervalued REITs (based on Price/NAV)
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Prime US REIT 0.19 Lippo Malls Indonesia Retail Trust 0.19 Keppel Pacific Oak US REIT 0.20 Manulife US REIT 0.21 ARA Hospitality Trust 0.39 OUE REIT 0.44
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Distribution Yields Overview
- TTM Distribution Yield increased to 8.07%. (Weighted Average increased to 6.63%)
- Increased from 7.75% in April 2024. (Weighted Average was 6.32%)
- 21 of 40 Singapore REITs have ttm distribution yields of above 7%.
- 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.
- 10 REITs have a ttm yield of over 10%!
- Highest Distribution Yield REITs (ttm)
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Prime US REIT 24.20 Keppel Pacific Oak US REIT 17.99 Daiwa House Logistics Trust 13.62 Elite Commercial REIT 13.13 ARA Hospitality Trust 12.25 United Hampshire REIT 11.27 - 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.
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- Yield Spread widened to 4.68%. (Weighted Average remained almost the same at 3.93%)
- Widened from 4.38% in April 2024. (Weighted Average was 3.90%)
- 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 39.12%. (Weighted Average: 38.13%)
- Increased from 38.76% in April 2024. (Weighted Average: 37.90%)
- Gearing Ratios are updated quarterly.
- S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.
- Highest Gearing Ratio REITs
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Manulife US REIT 58.3 EC World REIT 58.3 Prime US REIT 48.4 ARA Hospitality Trust 44.1 Lippo Malls Indonesia Retail Trust 43.7 Keppel Pacific Oak US REIT 43.0 - 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.
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Market Capitalisation Overview
- Total Singapore REIT Market Capitalisation decreased by 4.91% to S$84.84 Billion.
- Decreased from S$89.22 Billion in April 2024.
- Biggest Market Capitalisation REITs (S$):
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Capitaland Integrated Commercial Trust 12834.50 Capitaland Ascendas REIT 11125.20 Mapletree Logistics Tr 6741.90 Mapletree Pan Asia Commercial Trust 6408.66 Mapletree Industrial Tr 6180.30 Frasers Logistics & Commercial Trust 3740.00 - There are no change in the rankings since November 2022.
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- Smallest Market Capitalisation REITs (S$):
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Lippo Malls Indonesia Retail Trust 92.35 Elite Commercial REIT 115.91 Manulife US REIT 126.96 Prime US REIT 133.28 Keppel Pacific Oak US REIT 144.56 ARA Hospitality Trust 161.90
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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 Performers of April 2024
Source: https://screener.reitsavvy.com/
SG 10 Year Government Bond Yield
- SG 10 Year: 3.39% (increased from 3.22%)
Summary
The drop continues for S-REITs, approaching the low of 613 last reached in late 2023 (support). Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.78) value of the S-REITs, with still a very attractive DPU yield of 8.07%! (Weighted average yield of 6.67%). Do take note that NAV and DPU are lagging numbers.
Weighted Average Yield spread (in reference to the 10-year Singapore government bond yield of 3/39% as of May 3rd 2024) remained almost the same from 3.90% to 3.93%. Based on the CME group’s interest rate futures, there will still be a high possibility of rate cut of between 100-150 bps by end of 2024.
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
