Singapore REIT Monthly Update (March 5th, 2023)

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Technical Analysis of FTSE ST REIT Index (FSTAS351020)


FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 748.41 to 734.05 (1.91%) compared to last month’s update. After failing to break above the previous support turn resistance zone of 790-800 on February 3rd 2023, the S-REIT Index is currently retracing back and trading between the 730-744 zone for the past few weeks.

  • Short-term direction: Sideways (trading between 730-744 zone)
  • Medium-term direction: Sideways (50D SMA is sideways)
  • Long-term direction Down (200D SMA is sloping down)
  • Immediate Support at 730, followed by 714.
  • Immediate Resistance at 744, followed by 790-800 zone.

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on February 11th, 2023.

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.
  • 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 highlighted in yellow-green. All are now updated with the latest Q4 2022 business updates/earnings.
  • SPH Reit has been renamed to Paragon REIT since January 3rd, 2023.

Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced

 

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 March 3rd 2023. Notes:
    • Mapletree Pan Asia Commercial Trust: Annualised yield. MPACT has recently reverted to quarterly distribution.
    • Paragon REIT: Annualised yield. Calculated after converting from 13 months of distribution to 12 months.
  • 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 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 0.84.      
    • Decreased from 0.85 in February 2023.
    • 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 = 1.77)
    • Keppel DC REIT (Price/NAV = 1.43)
    • Mapletree Industrial Trust (Price/NAV = 1.24)
    • Mapletree Logistics Trust (Price/NAV = 1.19)
    • Capitaland Ascendas REIT (Price/NAV = 1.17)
    • Paragon REIT (Price/NAV = 1.05)
    • Only 7 REITs are overvalued now based on Price/NAV value.
    • No change in the Top 6 compared to last month.
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV=0.38)
    • EC World REIT (Price/NAV = 0.48)
    • ARA US Hospitality Trust (Price/NAV = 0.49)
    • Manulife US REIT (Price/NAV = 0.50)
    • Prime US REIT (Price/NAV = 0.51)
    • Keppel Pacific Oak US REIT (Price/NAV = 0.56)

Distribution Yields Overview

  • TTM Distribution Yield increased to 7.70%.        
    • Increased from 7.33% in February 2023.
    • 17 of 40 Singapore REITs have 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.
    • 9 REITs have a ttm yield of over 10%!
  • Highest Distribution Yield REITs (ttm)
    • Manulife US REIT (17.27%)
    • Prime US REIT (17.01%)
    • EC World REIT (13.23%)
    • Keppel Pacific Oak US REIT (12.75%)
    • United Hampshire REIT (12.00%)
    • Lippo Malls Indonesia Retail REIT (11.92%)
    • 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 widen slightly to 4.21%.    
    • Widened from 4.12% in February 2023.

Gearing Ratios Overview

  • Gearing Ratio increased slightly to 37.54%.     
    • Increased from 37.38% from February 2023.
    • 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
    • Manulife US REIT (48.8%)
    • Elite Commercial Trust (45.8%)
    • Lippo Malls Indonesia Retail Trust (44.6%)
    • Suntec REIT (42.4%)
    • Prime US REIT (42.1%)
    • United Hampshire US REIT (41.8%)

Market Capitalisation Overview

  • Total Singapore REIT Market Capitalisation decreased by 1.94% to S$96.84 Billion.
    • Decreased from S$98.76 Billion in February 2023.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($12.53B)
    • Capitaland Ascendas REIT ($11.68B)
    • Mapletree Pan Asia Commercial Trust ($9.01B)
    • Mapletree Logistics Trust ($8.08B)
    • Mapletree Industrial Trust ($6.40B)
    • Frasers Logistics & Commercial Trust ($4.64B)
    • No change in the rankings since September 2022.
  • Smallest Market Capitalisation REITs:
    • Lippo Malls Indonesia Retail Trust ($200M)
    • BHG Retail Trust ($249M)
    • EC World REIT ($292M)
    • ARA Hospitality Trust ($303M)
    • Elite Commercial REIT ($361M)
    • United Hampshire REIT ($369M)

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 February 2023


 (Source: https://stocks.cafe/kenny/advanced)

 

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 3.42% (increased from 3.13%)
  • US 10 Year: 3.96% (increased from 3.74%)

 

Major REIT News in January 2023


S-REITs earnings/results for Q4 2022 have wrapped up

All S-REITs have reported their earnings for Q4 2022. 22 out of 38 REITs (about 58%) reported YoY growth in DPU.

 

 

S-REIT Summary Charts


Below are 3 S-REIT Summary Charts. These show the current state of the S-REIT market.

 

Yield vs Price/NAV Chart. Size of bubbles represent market cap.

 

Gearing vs ICR Chart. Size of bubbles represent market cap.

 

Price/NAV Chart, with comparison between sectors.


Summary


Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.84) value of the S-REITs, with a very attractive DPU yield of 7.70%! The valuation and DPU yield are back to attractive level due to the correction in February probably caused by the increase of 10 year risk free rate.

It has been a bearish month for S-REITs. Poor performers include Capitaland Integrated Commercial Trust (-10.43% decline in market cap), Prime US REIT (-25.96%), Manulife US REIT (-14.06%), EC World REIT (-21.74%) and Keppel Pacific Oak REIT (-16.51%). 

 

 

(Source: https://stocks.cafe/kenny/overview)

Yield spread (in reference to the 10-year Singapore government bond yield of 3.42% as of 5 Mar 2023) widened slightly from 4.12% to 4.21%. 

Technically, FTSE ST REIT Index is trading in a short-term uptrend channel (higher high, higher low chart pattern) since finding the bottom in Oct 2022. Currently the REIT index is consolidating between 734-744. The short-term uptrend is still intact unless the 714 support is broken. If 744 resistance is broken, it is expected the S-REIT index to continue the bullish rebound with the next target 790-800 to breakout to enter into bull market. 

Based on the current overall S-REIT P/NAV of 0.84 and the potential peaking of interest rate in Q2/Q3 2023, the probability to have a severe crash in S-REIT is low unless we are entering into severe recession with big drop in DPU and US Fed continues to increase the interest rate fiercely beyond 6%.) 2023 would be a cautiously bullish for S-REIT with fundamentally strong S-REITs.

 

 

 

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

Continue ReadingSingapore REIT Monthly Update (March 5th, 2023)

Singapore REIT Monthly Update (February 11th, 2023)

  • Post author:

 

Technical Analysis of FTSE ST REIT Index (FSTAS351020)


FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 725.07 to 748.41 (3.22%) compared to last month’s update. The S-REIT Index is currently retracing back to the resistance turned support level at about 740, after failing to break above the previous support turn resistance zone of 790-800.

  • Short-term direction: Down (retracement is underway)
  • Medium-term direction: Up (50D SMA is sloping upward)
  • Long-term direction Down (200D SMA is sloping down)
  • Immediate Support at 740, followed by 712
  • Immediate Resistance at 790-800 zone.

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on January 1st, 2023.

 

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.
  • 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.
  • REITs highlighted in yellow-green are now updated with the latest Q4 2022 business updates/earnings.
  • REITs highlighted in yellow-orange are still using Q3 2022 results.
  • SPH Reit has been renamed to Paragon REIT since January 3rd, 2023.

Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced

 

 

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 February 10th 2023.
    • Daiwa House Logistics Trust: Yield calculated from trailing six months distribution, TTM yield is annualised.
  • 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 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 increased to 0.85. 
    • Increased from 0.80 in January 2023.
    • There has been a recent sell-off in September-October period.
    • 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 = 1.75)
    • Keppel DC REIT (Price/NAV = 1.43)
    • Mapletree Industrial Trust (Price/NAV = 1.22)
    • Mapletree Logistics Trust (Price/NAV = 1.19)
    • Capitaland Ascendas REIT (Price/NAV = 1.17)
    • Paragon REIT (Price/NAV = 1.05)
    • Only 7 REITs are overvalued now based on Price/NAV value.
    • No change in the Top 2 compared to the past 2 months.
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV=0.39)
    • Manulife US REIT (Price/NAV = 0.53)
    • ARA US Hospitality Trust (Price/NAV = 0.54)
    • BHG Retail Trust (Price/NAV = 0.54)
    • EC World REIT (Price/NAV = 0.57)
    • OUE Commercial REIT (Price/NAV = 0.58)

Distribution Yields Overview

  • TTM Distribution Yield decreased to 7.33%.
    • Decreased from 7.90% in January 2023.
    • 15 of 40 Singapore REITs have 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.
    • 9 REITs have a ttm yield of over 10%!
  • Highest Distribution Yield REITs (ttm)
    • Manulife US REIT (16.38%)
    • Prime US REIT (13.51%)
    • EC World REIT (12.46%)
    • United Hampshire US REIT (11.57%)
    • Keppel Pacific Oak US REIT (11.26%)
    • Cromwell European REIT (10.60%)
    • 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 4.12%.
    • Tightened from 4.69% in January 2023.

Gearing Ratios Overview

  • Gearing Ratio increased to 37.38%. 
    • Increased from 37.20% from January 2023.
    • Gearing Ratios are updated quarterly. 
    • S-REITs Gearing Ratio has been on a steady uptrend, from 35.55% in Q4 2019.
  • Highest Gearing Ratio REITs
    • Manulife US REIT (48.8%)
    • Lippo Malls Indonesia Retail Trust (43.7%)
    • ARA Hospitality Trust (43.3%)
    • Suntec REIT (43.1%)
    • United Hampshire US REIT (42.1%)
    • Prime US REIT (41.9%)

Market Capitalisation Overview

  • Total Singapore REIT Market Capitalisation increased by 3.56% to S$98.76 Billion.
    • Increased from S$95.36 Billion in January 2023.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($13.06B)
    • Capitaland Ascendas REIT ($11.63B)
    • Mapletree Pan Asia Commercial Trust ($9.06B)
    • Mapletree Logistics Trust ($8.08B)
    • Mapletree Industrial Trust ($6.29B)
    • Frasers Logistics & Commercial Trust ($4.90B)
    • No change in the rankings since September 2022.
  • Smallest Market Capitalisation REITs:
    • BHG Retail REIT ($244M)
    • Lippo Malls Indonesia Retail Trust ($262M)
    • ARA Hospitality Trust ($288M)
    • EC World REIT ($368M)
    • United Hampshire US REIT ($384M)
    • Elite Commercial REIT ($408M)

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 Best Performers of the Month in January 2023


 (Source: https://stocks.cafe/kenny/advanced)

 

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 3.13% (increased from 3.11%)
  • US 10 Year: 3.74% (decreased from 3.88%)

 

Major REIT News in January 2023


S-REITs earnings/results for Q4 2022 are underway

As of 11th February 2023, 25 REITs have reported their earnings for Q4 2022.

 


Summary


Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.85) value of the S-REITs, with a very attractive DPU yield of 7.33%! The valuation and DPU yield still attractive after the recent rebound since the beginning of 2023.

Interestingly, despite 24 REITs being bearish and only 10 REITs being bullish in the past month, market cap overall has increased very slightly by 0.26%. This is due to larger market cap REITs doing well (eg. Capitaland Ascott Trust (S$3.5B, 11.11%), ESR-LOGOS REIT (S$2.5B, 7.25%), Frasers Centrepoint Trust (S$3.6B, 3.45%). Only 3 of the bottom 12 performing REITs have market capitalisations of over S$1B. The top 5 largest Market Cap REITs have performances varying between -0.45% and -2.34%.

 

 

(Source: https://stocks.cafe/kenny/overview)

Yield spread (in reference to the 10-year Singapore government bond yield of 3.13% as of 10th February 2023) tightened from 4.69% to 4.12%. This is a huge decrease 0.57%, due to the rise of the REIT index and the relatively unchanged Bond Yields, bringing ttm yields down.

(Technically, FTSE ST REIT Index is trading in a short-term uptrend channel (higher high, higher low chart pattern) since finding the bottom in Oct 2022. After breaking up from the bull flag pattern, the S-REIT index is currently retracing to test the previous resistance turned support at about 740. If this support holds, it is expected the S-REIT index to continue the bullish rebound with the next target 790-800 to breakout to enter into bull market. 

Based on the current overall S-REIT P/NAV of 0.85 and the potential peaking of interest rate in Q2/Q3 2023, the probability to have a severe crash in S-REIT is low unless we are entering into severe recession with big drop in DPU and US Fed continues to increase the interest rate fiercely beyond 5%.) 2023 would be a cautiously bullish for S-REIT with fundamentally strong S-REITs.

 

OTCS Special Market Outlook 2023 – Inflation, US Markets and REITs


Do you know where are the risk and opportunities in 2023?

2022 saw rising inflation & S&P500 in down trend

Fed is planning to whatever it takes to tame inflation. Is it good for your portfolio?

Will the markets crash in 2023, or climb higher?

Shortly into 2023, we saw S&P500 recovering. Will it continue?

 

Timestamps

1:44:30 Intro

1:48:37 Market Recap: Singapore REIT Index performance; comparison with STI and Financial Index

  • 1:58:02 US Fed Hike Rate

2:00:42 Things to look out for in 2023

  • Keeping an eye on Net Asset Value/Unit and DPU growth trends

2:04:15 Why you need to look at financial ratios of a REIT and not just yields:

  • EC World REIT Case Study: Debt Management
  • Unsecured Borrowings

2:08:35 Capitaland Ascott Trust Case Study

2:10:23 Manulife US REIT Case Study: Risk of breaching 50% gearing ratio limit

  • How MUST could try to reduce its gearing ratio
  • Portfolio valuation dror

2:15:03 My radio interview on the S-REIT Market Outlook for 2023 (or view here)

2:17:32 REIT Investing Strategy for 2023

  • REITs are cyclical, despite poor performance during 2022

2:19:39 Summary

2:22:12 How your Investment Portfolio should look like

 

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

Continue ReadingSingapore REIT Monthly Update (February 11th, 2023)

Singapore REIT Monthly Update (January 1st, 2023)

  • Post author:

Happy New Year!!

Technical Analysis of FTSE ST REIT Index (FSTAS351020)


FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 723.18 to 725.07 (0.26%) compared to last month’s update. The REIT Index has rebounded from the sell-off in September and October and since early November has been within the range of 714 and 742. It has been moving sideways for the past 2 months. This is a typical flag pattern after a strong move.

  • Short-term direction: Sideways (20D SMA is moving sideways)
  • Medium-term direction: Sideways (50D SMA is moving sideways)
  • Long-term direction Down (200D SMA is sloping down)
  • Immediate Support at 714
  • Immediate Resistance at 742

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on December 4th, 2022.

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.
  • 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 highlighted in orange are now updated with the latest Q3 2022 business updates/earnings.
  • SPH Reit will be renamed to Paragon REIT from January 3rd, 2023, onwards.
  • Manulife US REIT (highlighted in blue) has Gearing, Price/NAV and NAV/Unit values updated according to the recent media conference. 

Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced

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 December 30th 2022.
    • Digital Core REIT and Daiwa House Logistics Trust: Yield calculated from trailing six months distribution, TTM yield is annualised.
  • 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 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 remained at 0.80. 
    • Remained at 0.80 since December 2022.
    • There has been a recent sell-off in September-October period.
    • 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 = 1.58)
    • Keppel DC REIT (Price/NAV = 1.29)
    • Capitaland Ascendas REIT (Price/NAV = 1.15)
    • Mapletree Industrial Trust (Price/NAV = 1.15)
    • Mapletree Logistics Trust (Price/NAV = 1.09)
    • ESR-LOGOS REIT (Price/NAV = 1.01)
    • Only 6 REITs are overvalued now based on Price/NAV value.
    • No change in the Top 2 compared to the past 2 months.
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV=0.34)
    • Prime US REIT (Price/NAV = 0.47)
    • ARA US Hospitality Trust (Price/NAV = 0.49)
    • Manulife US REIT (Price/NAV = 0.55)
    • Keppel Pacific Oak US REIT (Price/NAV = 0.55)
    • EC World REIT (Price/NAV = 0.56)

Distribution Yields Overview

  • TTM Distribution Yield increased to 7.90%.
    • Increased from 7.67% in December 2022.
    • 19 of 40 Singapore REITs have 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. The recent sell-off contributed to the increase in average yield.
    • 9 REITs have a ttm yield of over 10%!
  • Highest Distribution Yield REITs (ttm)
    • Manulife US REIT (17.67%)
    • Prime US REIT (17.21%)
    • Keppel Pacific Oak US REIT (13.48%)
    • United Hampshire US REIT (12.82%)
    • EC World REIT (12.74%)
    • Lippo Malls Indonesia Retail Trust (12.00%)
    • 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 widened to 4.69%.
    • Widened slightly from 4.61% in December 2022.

Gearing Ratios Overview

  • Gearing Ratio increased to 37.20%. 
    • Increased from 37.03% from December 2022.
    • Gearing Ratios are updated quarterly. Only Manulife US REIT have an updated gearing ratio value in the past month.
  • Highest Gearing Ratio REITs
    • Manulife US REIT (49.0%)
    • Lippo Malls Indonesia Retail Trust (43.7%)
    • ARA Hospitality Trust (43.3%)
    • Suntec REIT (43.1%)
    • United Hampshire US REIT (42.1%)
    • Elite Commercial REIT (41.9%)

Market Capitalisation Overview

  • Total Singapore REIT Market Capitalisation increased by 0.26% to S$95.36 Billion.
    • Increased from S$95.11 Billion in December 2022.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($13.52B)
    • Capitaland Ascendas REIT ($11.51B)
    • Mapletree Pan Asia Commercial Trust ($8.74B)
    • Mapletree Logistics Trust ($7.64B)
    • Mapletree Industrial Trust ($6.00B)
    • Frasers Logistics & Commercial Trust ($4.31B)
    • No change in the rankings since September 2022.
  • Smallest Market Capitalisation REITs:
    • Lippo Malls Indonesia Retail Trust ($231M)
    • BHG Retail REIT ($257M)
    • ARA Hospitality Trust ($267M)
    • United Hampshire US REIT ($349M)
    • EC World REIT ($360M)
    • Elite Commercial REIT ($365M)
    • No change in the top 3 rankings from last 2 month’s update.

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 December 2022


 (Source: https://stocks.cafe/kenny/advanced)

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 3.11% (increased from 3.00%)
  • US 10 Year: 3.88% (increased from 3.49%)

Major REIT News in December 2022


 

Hong Kong’s Link Real Estate Investment Trust (REIT) enters Singapore market

CNA: Hong Kong-listed Link Real Estate Investment Trust (REIT) is buying a portfolio of Singapore shopping malls for S$2.16 billion (US$1.6 billion) from Mercatus Co-operative in its first foray into the country. The deal is for the acquisition of suburban retail assets Jurong Point and Swing By @ Thomson Plaza, along with a 10-year asset and property management service agreement for a third suburban mall, AMK Hub, which will remain under the ownership of Mercatus, Link REIT said in a stock exchange filing on Wednesday (Dec 28).

“This transaction allows us to build a dedicated team in Singapore and provides a base for Link to expand further into other asset classes and strategies in Asia Pacific,” Link CEO George Hongchoy said in a statement. Link, Asia’s biggest REIT, said it will fully fund the purchase through cash and debt, adding that it is in active discussions with investors and open to bringing in capital partners.

The announcement confirms a Reuters report in November that cited sources saying Link REIT was the frontrunner to buy the assets from Mercatus, a unit of Singapore shopping mall owner NTUC Enterprise Co-operative, in what would be Southeast Asia’s biggest real estate transaction of 2022. Read More

SPH REIT renames to Paragon REIT from January 3rd, 2023

THE BUSINESS TIMES: SPH Real Estate Investment Trust (Reit) will be renamed to Paragon Reit as the name change will better reflect the trust’s vision and mission to capture unique opportunities in the Asia-Pacific retail landscape, the Reit manager said on Thursday (Dec 29). The names of its security, counter and manager – along with the Reit’s logo and website – will reflect the new name with effect from 9 am on Jan 3, 2023. The Reit manager added that the trust will be “bolstered by the deep real estate sector knowledge and strong relationships” of its sponsor, Cuscaden Peak Investments.

 

Cuscaden Peak Investments was formerly known as Singapore Press Holdings, and is a wholly-owned subsidiary of Cuscaden Peak. Cuscaden Peak is a consortium comprising tycoon Ong Beng Seng’s Hotel Properties Limited, and Temasek-linked CLA Real Estate Holdings and Mapletree. The Reit’s existing counter code – “SK6U” – on the Singapore Exchange will remain unchanged.

It will also continue to be led by the current management team, retain its investment mandate, and manage its existing portfolio of assets. Read More


Summary


Fundamentally, the whole Singapore REITs landscape remains very undervalued based on the average Price/NAV (at 0.80) value of the S-REITs, which is quite rare that S-REIT is trading at such huge discount with a very attractive DPU yield of 7.90%! This is even higher than that of last month. Below is the market cap heat map for the past 1 month.

Interestingly, despite 24 REITs being bearish and only 10 REITs being bullish in the past month, market cap overall has increased very slightly by 0.26%. This is due to larger market cap REITs doing well (eg. Capitaland Ascott Trust (S$3.5B, 11.11%), ESR-LOGOS REIT (S$2.5B, 7.25%), Frasers Centrepoint Trust (S$3.6B, 3.45%). Only 3 of the bottom 12 performing REITs have market capitalisations of over S$1B. The top 5 largest Market Cap REITs have performances varying between -0.45% and -2.34%.

(Source: https://stocks.cafe/kenny/overview)

Yield spread (in reference to the 10-year Singapore government bond yield of 3.11% as of 30th December 2022) widened from 4.61% to 4.69%. This is a slight increase of 0.08% due to the share price erosion outpaces in the increase of the risk-free rate. 

Technically, FTSE ST REIT Index is trading in a bearish territory but rebounded strongly from the support level. The index is forming a flag pattern (either bull flag or bear flag) and future direction is unknown until the breakout. Breaking up from the flag pattern shows the continuation of the bullish rebound. However, breaking down from the flag pattern indicates the previous rebound is just a dead cat bounce and the REIT index may crash down to test the support of 665 level.  Based on the current overall S-REIT P/NAV of 0.80 and the potential peaking of interest rate in Q2/Q3 2023, the probability to have a severe crash in S-REIT is low unless we are entering into severe recession with big drop in DPU and US Fed continues to increase the interest rate fiercely beyond 5%.

Interview with Phillip Capital: Get A Slice of Property Action with REITs


Recently I had an interview with The Financial Coconut. You can view the video below. Questions that I answered include:

  • About Kenny Loh (0:50)
  • Short to mid-term outlook for global markets (1:11)
  • Current Investment Sentiments (1:54)
  • What is the best time to invest? Why invest during the bear market (3:15)
  • What sectors/asset classes should I invest in? (3:43) REITs’ valuation per unit has reached lower than during the 2020 COVID Crash.
  • Why REITs are very attractive now & market outlook (4:40)
  • What is a REIT? (6:48)
  • Pros and Cons of investing in REITs. Are REITs the right investment instrument for you? (7:55)
  • What are Thematic Portfolios? (Portfolio Themes) (9:17)
    • Technology Disruption
    • China’s Economic Growth
    • Decarbonisation
  • Advice on weathering the current grim investment outlook (11:36)
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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

Continue ReadingSingapore REIT Monthly Update (January 1st, 2023)