Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) changes from 698.05 to 745.45 (+6.8%) compared to last month update. REIT Index has rebounded 26.42% as of May 15 closed after hitting the recent high of 776 (c.33% rebound from the bottom).

Currently the REIT index is going through a minor correction but still trading in a uptrend channel. Immediate support at about 740 (channel support) followed by 720 (previous resistance turned support)

The REIT index is testing the Immediate Resistance now at about 750 which is the 20D & 50D SMA dynamic resistance. As such, we have to keep a close eye in the next few days to see whether the uptrend is still in tact (if break the 20D & 50D SMA resistance) or the end of the uptrend (break the support at 720).

Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on April 8, 2020.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 41 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. DPU Yield for Elite Commercial REIT, United Hampshire REIT are projections based on the IPO prospectus.

• Note 1: The Financial Ratio are based on past data and there are lagging indicators.
• Note 2: This REIT table takes into account the dividend cuts due to COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields.
• Noted 3: Distribution Yield, NAV, Gearing Ratio would probably be adjusted moving forward.
• Note 4:  Historical Price/NAV High and Low information is available here.
• Note 5: Additional financial ratio such as WALE, WADM, All in Interest Cost, Interest Coverage Ratio, Unsecured Loan %, Fixed Interest %, Geographical location of the properties, etc have been compiled and updated monthly in Kenny’s Enhance REIT table.
• Note 6: Some REITs opted for semi-annual reporting.
• Note 7: MAS has raised the Gearing Limit from 45% to 50% on April 16. The implementation of Interest Coverage Ratio (ICR) > 2.5x has been deferred to Jan 1, 2022. See the announcement Higher Leverage Limit and Deferral of Interest Coverage Requirement by MAS.

• Price/NAV increased from 0.80 to 0.84 (Singapore Overall REIT sector is very undervalued now).
• Distribution Yield decreased from 9.64% to 7.68% (take note that this is lagging number). About 50% of Singapore REITs (21 out of 41) have Distribution Yield > 7%. Do note that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
• Gearing Ratio increased from 35.39% to 36.47%.  31 out of 42 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: Gearing may be affected (ie. potential increase) as the valuation of the portfolio would be reduced.
• The most overvalued REITs are Keppel DC REIT (Price/NAV = 2.06), followed by Parkway Life (Price/NAV = 1.63), Mapletree Industrial Trust (Price/NAV = 1.51), Mapletree Logistic Trust (Price/NAV = 1.50) and Ascendas REIT (Price/NAV = 1.34).
• The most undervalued REITs (based on NAV) are Eagle Hospitality Trust* (Price/NAV =0.15), followed by Lippo Malls Indonesia Retail Trust (Price/NAV = 0.47), ARA Hospitality Trust (Price/NAV = 0.44), Far East HT (Price/NAV = 0.53) and Starhill Global (Price/NAV = 0.52)
• The Highest Distribution Yield (TTM) is Eagle Hospitality Trust* (25.39%) followed by Lippo Malls Indonesia Retail Trust (13.64%), ARA Hospitality Trust (11.23%) and Soilbuild Business Trust (10.55%). Reminder that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
• The Highest Gearing Ratio REITs are Lippo Malls Trust (42.1%), ESR REIT (41.7%), ARA Hospitality Trust (41.0%) and ARA Logos Log Trust (40.8%) (previously Cache Log Trust).
• Top 5 REITs with biggest market capitalisation are Ascendas REIT ($10.49B), Mapletree Logistics Trust ($6.92B), CapitaMall Trust ($6.42B), Mapletree Commercial Trust ($5.96B) and Capitaland Commercial Trust ($5.83B)
• The bottom 3 REITs with smallest market capitalisation are Eagle Hospitality Trust ($119M), ARA Hospitality Trust ($213M) and Elite Commercial REIT ($224M)

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Workshop here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

*Eagle Hospitality Trust is currently suspended

Interest Rate Watch

• 1 month decreases from 0.99000% to 0.31500%
• 3 month decreases from 1.01000% to 0.62325%
• 6 month decreases from 1.77000% to 0.81225%
• 12 month decreases from 1.43887% to 1.26166%

Summary

Fundamentally the whole Singapore REITs is undervalued now based on simple average on the Price/NAV. The big cap REITs rebounded quickly after the huge REIT crash. Valuation are very attractive across all the REITs but do take note that NAV is lagging. NAV would probably be reduced caused by the devaluation of property value. We have seen the NAV of some REITs are adjusted downward from the latest earning release or business update.

The most impacted sectors are Hospitality and Retail Malls and we see huge sell down over the past few weeks. Keppel DC REIT, Parkway Life REIT, Ascendas REIT, Mapletree Logistic Trust and Mapletree Industrial Trust are holding well during this sell off.

Yield spread (reference to 10 year Singapore government bond of 0.71%) has reduced from  8.54% to 6.97%. The risk premium are very attractive to accumulate slowly in stages to lock in the current valuation and long term yield after the recovery.

Technically the REIT Index is currently trading at the critical juncture sandwiched between the critical resistance and support. Breaking anyone of the them will set the new direction of the REIT index in the next few days.

You can listen to my recent MoneyFM89.3 Radio Interview here for more insights.

I was invited by MAL Academy as guest speak on Facebook Live (Mandarin) to share Risk or Opportunity to hold REITs on May 19 (Tuesday) 8pm.

https://www.facebook.com/MALACADEMY

If you do not have any knowledge on REIT Investing, you can check out My next Singapore REIT investing course . https://mystocksinvesting.com/course/singapore-reits-investing/

If you do not have time to learn all the basic, or you want to kick start your REIT portfolio within 1 month, I can help you to construct a REIT portfolio with a fee.  You can just sit back, relax and wait for the dividend to come it as I will be doing all the job in managing your REIT portfolio. For REIT Portfolio Consultation, please drop me an email marubozu@mystocksinvesting.com

You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) went through the a historical event of Singapore REIT Black Monday Market Crash.  You may view the Webinar here if you need to under the WHY it happened. COVID-19 Crash: Risk or Opportunity to hold REIT?

The REIT index has crashed from 941.89 to 698.05 (-25.89%) compared to last month update. The REIT index has dropped from the peak (976.419) and rebounded from 584.384, which translates about 40.12% sell of.

Based on the current chart patter, the REIT index may have found the bottom as Exhaustion Gap (if this is true) is formed after the Breakaway gap and Running Gap. Currently the index is trading in a Symmetrical Triangle consolidation pattern in a down trend.

Immediate support at 600 and Immediate Resistance at 734 (38.2% Fibonacci Retracement Level and also a Runaway Gap Resistance). Probable direction for REIT index: Range Bound between 600 and 734. Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Mar 8, 2020.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 42 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. DPU Yield for Elite Commercial REIT, United Hampshire REIT and Lendlease Global Commercial REIT are projection based on the IPO prospectus.

• Note 1: The Financial Ratio are based on past data and there are lagging indicators.
• Note 2: This REIT table would be the last “Normal” table (with last financial data) before impacted by the future dividend cut due to COVID-19 outbreak.
• Noted 3: Distribution Yield, NAV, Gearing Ratio would probably be adjusted moving forward.
• Note 4:  Historical Price/NAV High and Low information is available here.

• Price/NAV decreases from 1.07 to 0.80 (Singapore Overall REIT sector is undervalued now).
• Distribution Yield increases from 6.64% to 9.64% (take note that this is lagging number). About 80% of Singapore REITs (32 out of 42) have Distribution Yield > 7%. Do note that these yield numbers are based on current prices with historical (pre Covid-19) yields.
• Gearing Ratio stays at 35.39%.  26 out of 42 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: Gearing may be affected (ie. potential increase) as the valuation pf the portfolio would be reduced.
• The most overvalue REIT is Keppel DC REIT (Price/NAV = 2.04), followed by Parkway Life (Price/NAV = 1.61), Mapletree Industrial Trust (Price/NAV = 1.34), Mapletree Logistic Trust (Price/NAV = 1.27) and Ascendas REIT (Price/NAV = 1.18).
• The most undervalue (base on NAV) is Eagle Hospitality Trust* (Price/NAV =0.15), followed by Lippo Malls Indonesia Retail Trust (Price/NAV = 0.38), ARA Hospitality Trust (Price/NAV = 0.36),CDL HT (Price/NAV = 0.47) and Starhill Global (Price/NAV = 0.45)
• The Highest Distribution Yield (TTM) is Eagle Hospitality Trust* (33.85%) followed by Lippo Malls Indonesia Retail Trust (21.24%), ARA Hospitality Trust (17.82%) and ESR REIT (16.04%). Reminder that these yield numbers are based on current prices with historical (pre Covid-19) yields. Dividend would be cut in next 2-3 quarters.
• The Highest Gearing Ratio are ESR REIT (41.5%), OUE Comm REIT (40.3%), Far East HTrust (39.2%), Cache Logistic Trust (40.1%) and IREIT Global (39.3%).
• Top 5 REITs with biggest market capitalisation are Ascendas REIT ($9.65B), CapitaMall Trust ($5.98B), Capitaland Commercial Trust ($5.40B), Mapletree Commercial Trust ($5.22B), Mapletree Logistic Trust ($5.89B)
• The bottom 3 REITs with smallest market capitalisation are Eagle Hospitality Trust ($171M), ARA Hospitality Trust ($260M) and BHG Retail REIT ($259M)

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Workshop here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

*Eagle Hospitality Trust is currently suspended

Interest Rate Watch

• 1 month decreases from 1.46701% to 0.99000%
• 3 month decreases from 1.47101% to 1.01000%
• 6 month increases from 1.60431% to 1.77000%
• 12 month decreases from 1.93600% to 1.43887%

Summary

Fundamentally the whole Singapore REITs is undervalued now based on simple average on the Price/NAV. The big cap REITs rebounded quickly after the huge REIT crash. Valuation are very attractive across all the REITs but do take note that NAV is lagging. NAV would probably be reduced caused by the devaluation of property value caused by the COVID-19 lock down.

The most impacted sectors are Hospitality and Retail Malls and we see huge sell down over the past few weeks. Keppel DC REIT, Parkway Life REIT, Ascendas REIT, Mapletree Logistic Trust and Mapletree Industrial Trust are holding well during this sell off.

Yield spread (reference to 10 year Singapore government bond of 1.095%) has widened greatly from 5.42% to 8.54%. The risk premium are very attractive to accumulate slowly in stages to lock in the current valuation and long term yield after the recovery.

The market would be very volatile during this period because it is a huge fight between the bull and bear.

Investors should LOOK BEYOND COVID-19 when comes to investing in REITs with an eye wide opens that there will be dividend cut in the near term.

You can view the REIT Market Update Webinar here or listen to MoneyFM89.3 Radio Interview here for more detail explanation.

STAY HOME and INVEST SAFELY!

If you want to capture the current market opportunity but do not have the knowledge, you can attend My next Singapore REIT investing course (Webinar training) is planned on April 18, 2020. You can register here. https://mystocksinvesting.com/course/singapore-reits-investing/

If you do not have time to learn all the basic, or you want to kick start your REIT portfolio within 1 month, I can help you to construct a REIT portfolio with a fee.  You can just sit back, relax and wait for the dividend to come it as I will be doing all the job in managing your REIT portfolio. For REIT Portfolio Consultation, please drop me an email marubozu@mystocksinvesting.com

You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) broke out from the consolidation and hit historical high at 973.21.  The REIT index has changed from 941.99 to 941.89  (-0.01%). The REIT index has a flash sold off due to COVID-19 fear but immediately rebounded strongly from the support at 884.292. Currently the REIT index goes above the 50D and 200D SMA.  Based on the current trend and chart pattern, the REIT index is still trading on an bullish uptrend.  Immediate support at 940 (Previous Resistance turned support) followed by 920 (200 SMA). Probable direction for REIT index: Up. Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on 02-02, 2020.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 40 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. DPU Yield for Eagle Hospitality Trust, Prime US REIT and Lendlease Global Commercial REIT are projection based on the IPO prospectus. Elite Commercial REIT is not included as newly IPOed.

Note： The Financial Ratio are based on past data and there are lagging indicators.

• Price/NAV decreases from 1.10 to 1.07 (Singapore Overall REIT sector is over value now).
• Distribution Yield increases from 6.24% to 6.64% (take note that this is lagging number). About 30% of Singapore REITs (12 out of 40) have Distribution Yield > 7%.
• Gearing Ratio stays at 35.4%.  25 out of 40 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: The current limit of gearing ratio for REITs listed in Singapore Stock Exchange is 45% but there is a consultation paper by SGX to review the potential increase to 50-55% limit.
• The most overvalue REIT is Keppel DC REIT (Price/NAV = 2.18), followed by Parkway Life (Price/NAV = 1.88), Ascendas REIT (Price/NAV = 1.59), Mapletree Industrial Trust (Price/NAV = 1.89), Mapletree Logistic Trust (Price/NAV = 1.69), Frasers Logistic & Industrial Trust (Price/NAV = 1.35),  Frasers Centerpoint Trust (Price/NAV = 1.34) and Mapletree Commercial Trust (Price/NAV = 1.30).
• The most undervalue (base on NAV) is Eagle Hospitality Trust (Price/NAV =0.37), followed by  Lippo Malls Indonesia Retail Trust (Price/NAV = 0.71) and Far East Hospitality Trust (Price/NAV = 0.70)
• The Highest Distribution Yield (TTM) is Eagle Hospitality Trust (19.38%) followed by SoilBuild BizREIT (8.79%), Lippo Mall Indonesia Retail Trust (11.21%), Sasseur REIT (8.6%), EC World REIT (8.46%), First REIT (8.78%) and Cache Logistic Trust (8.00%).
• The Highest Gearing Ratio are ESR REIT (41.5%), OUE Comm REIT (40.3%), Far East HTrust (39.2%), Cache Logistic Trust (40.1%) and EC World REIT (38.7%).
• Top 5 REITs with biggest market capitalisation are Ascendas REIT ($12.23B), CapitaMall Trust ($9.15B), Capitaland Commercial Trust ($7.75B), Mapletree Commercial Trust ($7.54B) and Mapletree Logistic Trust ($7.56B)
• The bottom 3 REITs with smallest market capitalisation are BHG Retail REIT ($316M), Sabana REIT ($474M) and iREIT Global REIT ($507M)

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Workshop here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

Interest Rate Watch

The US Fed just announced a 50 bps emergency rate cut to combat the COVID-19 on Mar 3, 2020.

https://edition.cnn.com/2020/03/03/economy/federal-reserve-rate-cut/index.html

• 1 month decreases from 1.68717% to 1.46701%
• 3 month decreases from 1.73862% to 1.47101%
• 6 month decreases from 1.82363% to 1.60431%
• 12 month decreases from 1.96338% to 1.93600%

Based on the latest forecast, there is another 50 bps rate cut on Mar 18!

This is crazy! another 50 bps rate cut in 2 weeks time? The economic impact must be huge due to COVID-19 outbreak in US to trigger 100 bps rate cut in 1 month!

SGX Fund Flow

Top institution sell banks and switch to industrial REITs. Huge out flow of Singapore banks in Feb 2020 and this trend should continue in anticipate of another 50 bps interest rate cut.

Summary

Fundamentally the whole Singapore REITs is over value now based on simple average on the Price/NAV. The big cap REITs rebounded quickly after the recent sell off. Valuation remains very rich for big cap REITs due to its defensive nature. Most of the DPU yield for big cap REIT are below 5% now such as CapitaCom Trust, CapitaMall Trust, Fraser Centerpoint Trust, Keppel DC REIT, Keppel REIT, Parkway Life REIT, Mapletree Com Trust, Mapletree Logistics Trust and Mapletree Industrial Trust. The distribution yield of ParkwayLife REIT (3.66%) and Keppel DC REIT (3.1%)  have dropped below 4%. However, the yield remains attractive for most Singapore REITs compared to other fixed income asset classes like corporate bonds and government bonds. The yield spread between big cap and small cap REIT has widen due to the recent sell off as small & mid cap REITs have not rebounded as strong as big cap REITs.

Yield spread (reference to 10 year Singapore government bond of 1.22%) has widened from 4.636% to 5.42% The risk premium for small cap REIT is very attractive as compared to big cap REITs. This indicates value picks only in small and medium cap REITs.

Below chart is the One Year  comparison between  FTSE ST REIT Index, FTSE ST Financial Index and Straits Time Index (STI). STI and Financial Sectors suffered huge losses due to the fear of COVID-19 outbreak. However, Singapore REIT index is holding very well and still trading in positive gain (1 year performance) due to its defensiveness.

Singapore REITs may continue to do well in 2020 due to ultra low interest rate environment, high yield and its defensiveness during the volatile period. Some of the rental income will probably be affected due to COVID-19 for 3-9 months like hospitality sector and retail mall.  Investors may consider to use this opportunity to accumulate under value REITs caused by the panic sell off, wait patiently for the share price recovery and DPU recovery while collecting regular dividend. Time in the market is better than time the market.

STAY CALM, DO HOME WORK, SHOP CHEAP REITs and WAIT PATIENTLY.

If you want a “Sleep Well” Dividend  Paying Portfolio to make your money works harder for you, Singapore REIT is one of the asset classes you must have in your investment portfolio. Of course, you have to learn more about the fundamental of REITs, the behaviors of the REITs, and pro/cons of the REITs.

My next Singapore REIT investing course is planned on April 18, 2020. You can register here. https://mystocksinvesting.com/course/singapore-reits-investing/

If you do not have time to learn all the basic, or you want to kick start your REIT portfolio within 1 month, I can help you to construct a REIT portfolio with a fee.  You can just sit back, relax and wait for the dividend to come it as I will be doing all the job in managing your REIT portfolio. For REIT Portfolio Consultation, please drop me an email marubozu@mystocksinvesting.com

You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement