Singapore REIT Monthly Update (Mar 04 – 2021)

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Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 877.59 to 826.65 (-5.80%) compared to last month update. Currently the Singapore REIT index is moving sideway after a false breakout at the resistance of 874.

  • As for now, Short term direction: Sideway.
  • Immediate Support at 825, followed by 775.
  • Immediate Resistance at 874.

Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Jan 24, 2021.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 40 Singapore REITs with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

  • 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, thus yield displayed might be lower.
  • Note 3: REITs highlighted in blue have been updated with the latest the Q4 2020 business updates.

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

Do sign up for the REIT screener at only ~$8.33 per month! (limited time only). Normal price $120 per year.

  • Price/NAV decreased at 0.98
    • Decreased from 1.01 in January 2021
    • Singapore Overall REIT sector is at about fair value now
    • Take note that NAV is adjusted downward for most REITs due to drop in rental income (Property valuation is done using DCF model or comparative model)
  • TTM Distribution Yield increased to 5.68%
    • Increased from 5.45% in January 2021
    • One Third of Singapore REITs (13 out of 39) 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 post circuit breaker recovery.
    • Exclude Eagle Hospitality Trust due to suspension.
  • Gearing Ratio at 37.44%. 
    • Reduce from 38.19% in January 2021.
    • In general, Singapore REITs sector gearing ratio is healthy but started to increase due to the reduction of the valuation of portfolios and increase in borrowing.
  • Most overvalued REITs (based on Price/NAV)
    • Keppel DC REIT (Price/NAV = 2.28)
    • Parkway Life (Price/NAV = 2.09)
    • Mapletree Industrial Trust (Price/NAV = 1.55)
    • Mapletree Logistics Trust (Price/NAV = 1.45)
    • Ascendas REIT (Price/NAV = 1.34)
    • No change from January 2021 for top 5 overvalued REITs ranking
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV = 0.36)
    • First REIT (Price/NAV = 0.42)
    • OUE Commercial REIT (Price/NAV = 0.63)
    • Starhill Global REIT (Price/NAV = 0.64)
    • BHG REIT (Price/NAV = 0.67)
    • Sabana REIT (Price/NAV =0.73)
    • Suntec REIT (Price/NAV = 0.73)
  • Highest Distribution Yield REITs (ttm)
    • First REIT (19.76%)
    • KepPacOak US REIT (9.16%)
    • Prime US REIT (8.73%)
    • Manulife REIT (8.42%)
    • Sasseur REIT (7.65%)
    • 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.
  • Highest Gearing Ratio REITs
    • Eagle Hospitality Trust (65.5%) * Filed for Chapter 11 Bankruptcy Protection *
    • First REIT (49%)
    • ARA Hospitality Trust (48.2%)
    • Suntec REIT (44.3%)
    • Lippo Malls Retail Trust (42.4%)
    • ESR REIT (41.6%)
    • Mapletree NAC Trust (41.3%)
    • OUE Commercial REIT (41.2%)
  • Total Singapore REIT Market Capitalisation = S$104.9 Billion.
    • Decreased from S$107.2 Billion in January 2021.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($13.91B)
    • Ascendas REIT ($11.64B)
    • Mapletree Logistics Trust ($8.48B)
    • Mapletree Commercial Trust ($6.73B)
    • Mapletree Industrial Trust ($6.70B)
  • Smallest Market Capitalisation REITs:
    • BHG Retail REIT ($296M)
    • United Hamsphire REIT ($327M)
    • First REIT ($328M)
    • ARA Hospitality Trust ($380M)
    • Sabana REIT ($400M)
  • Eagle Hospitality Trust is currently suspended

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 Singapore REIT for long term investing for passive income generation.

Top 20 Performers of the Month (Source: https://stocks.cafe/kenny/advanced)

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 1.391%
  • US 10 Year: 1.45%

Summary

Fundamentally the whole Singapore REITs is close to fair value now based on simple average on the Price/NAV. Below is the market cap heat map for the past 1 month. In general, the Singapore REITs sector is going through a correction now caused by a spike in 10 Years US Treasury Bond Yield due to  the fear of inflation. However, I think it is still too early to talk about inflation now as the world is still at the early economy recovery phase. This is probably a knee jerk reaction to let go some weak investors. This correction presents another entry opportunities for investors who miss out the entry during the market crash in Mar-May 2020. Next US FOMC meeting is on Mar 17, 2021 and it is 95.2% probability the US fed will keep the current low interest rate.

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

Yield spread (reference to 10 year Singapore government bond of 1.391%) tighten from 4.449% to 4.289% . However, the risk premium are still attractive to accumulate Singapore REITs in stages to lock in the current price and long term yield after the recovery. Moving forward, it is expected the increase of DPU due to the recovery of global economy.

Technically the REIT Index is currently trading in a sideway consolidation after the false breakout. However, current macro factors such as low interest rate environment, aggressive M&A for future DPU growth and recovery of global economic support the bullish breakout.

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 on my extensive research and years on Singapore REIT investing experience can approach me separately for REIT Portfolio Consultation.

Kenny Loh is a Senior Consultant 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 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 (Mar 04 – 2021)

Invest in Orchard Road, Singapore, with S-REITs!

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Orchard Road is home to familiar names such as Takashimaya, Paragon, Plaza Singapura, 313@Somerset. But with S-REITs, you can invest in a part of Singapore’s largest retail district.

Orchard Road during the holiday season, where Christmas decorations are in full swing. Photo: visitsingapore

Retail is not the only REIT sector along Orchard Road. Despite mostly having a Retail REIT presence, there are also several other REIT sectors, such as hospitality and office REITs in the vicinity. Below are some of the REITs found in Orchard Road, with a handy diagram on where they are located within the shopping district. Property valuation figures are accessed via the REIT’s website as of 5th Februrary 2021.

 

Retail/Integrated Developments

Located next to Dhoby Ghaut MRT, Capitaland Integrated Commercial Trust, Singapore’s largest REIT by market capitalisation, has portfolios consisting of both The Atrium@Orchard and Plaza Singapura along Orchard Road. With large tenants such as Spotlight and Golden Village, both properties have a total property valuation of S$2.04 billion.

Starhill Global’s portfolio includes Wisma Atria and Ngee Ann City along Orchard Road. Both are integrated Retail and Office developments, including anchor tenants such as Takashimaya Department Store. Located next to Orchard MRT, they have a combined property valuation of S$2.062 billion.

Located right above Somerset MRT, 313@Somerset is Lendlease Global Commercial REIT’s presence in Orchard Road. 313@Somerset includes many fashion tenants such Love Bonito, ZARA, FOREVER 21, Cotton On and The Editor’s Market etc. It has a property valuation of S$1.008 billion.

OUE Commercial REIT has 2 properties along Orchard Road, namely Mandarin Gallery and Mandarin Orchard Hotel. Mandarin Gallery specialises in high-end retail with many brands such as Bathing Ape and HUGO BOSS, while Mandarin Orchard Hotel is an upscale hotel with 1,077 rooms. Both have a combined portfolio valuation of S$1.721 billion.

Paragon is a premier upscale mall, specialising in high end retail and fashion. Paragon also houses Paragon Medical, which hosts approximately 90 medical and dental specialist clinics and offices.

 

Office

The newest property included within this article, 9 Penang Road is a newly completed Grade A commercial building. The ten-storey development consists of two towers with office space across eight floors and retail space at the first level. It has a property valuation of S$276.0 million.

 

Hospitality

Located behind Knightsbridge Mall (or more easily known as the mall with Apple Store Orchard), Ascott Orchard is a serviced residence consisting of 220 suites comprising studios to two-bedroom units and penthouses. It has a property valuation of $413 million.

Far East Hospitality Trust’s portfolio consists of 2 hotels, Orchard Rendezvous Hotel at the western end and Rendezvous Hotel at the eastern end of Orchard Road. Combined, there are 686 guest rooms between the 2 hotels, with a property valuation of S$715.3 million.

Located opposite Orchard Rendezvous Hotel, Orchard Hotel has 656 guest rooms. Adjacent to Orchard Hotel is Claymore Connect, a small lifestyle mall. Both properties have a combined property valuation of S$466.0 million.

 

Healthcare

ParkwayLife REIT has 2 hospitals, one within Orchard (Mount Elizabeth Hospital) and one in the nearby Tanglin area (Gleneagles Hospital). Gleneagles Hospital consists of 257 beds while Mount Elizabeth Hospital has 345 beds. They have a combined total property valuation of S$1.143 billion.

Below is map which highlights the approximate location of each of the properties listed above, including several landmarks such as MRT stations. The map is not drawn to scale.

 

Portfolio Information is just one of the fundamentals to look at when choosing which REITs to invest in. One of which is gearing ratio (leverage ratio). Yield and lease management of REITs are also factors to consider.  For example, a property located along Orchard Road (good location) but with low occupancy rates (bad) is not necessarily good.

By investing in one of the above REITs, you will be investing in the REIT as a whole. For example, by investing in Suntec REIT, you will not just be investing in 9 Penang Road, but Suntec City Mall and Office Towers too.

In the following, using the StocksCafe REIT screener (free version), we can compare the Market Capitalisations, Yield (trailing twelve months) and Gearing Ratios for each of the REITs listed above.

Fundamental Ratios for each of the 10 REITs with properties along Orchard Road. Data taken from StocksCafe. REITs with Period Ending 31 December 2020 are updated with the latest Q4 2020 business and earning updates. Data accessed 5th February 2021.

The above table shows the 10 S-REITs, sorted by market capitalisation in descending order. For yield, the value is calculated using the trailing twelve months distribution per unit (DPU) data. Therefore it may be lower than usual due to dividend cuts brought about by the Covid-19 pandemic. Gearing is simply the percentage of total debt/total equity.

For more detailed and regularly updated information for each of the REITs, do try out and subscribe to the comprehensive StocksCafe REIT Screener. At ~$8.40 per month (current early bird promotion with a yearly subscription), get access to much more information such as occupancy rates, debt information, interest coverage ratio etc. for each REIT. You can try out the features here.

Continue ReadingInvest in Orchard Road, Singapore, with S-REITs!

Singapore REIT Fundamental Analysis Comparison Table Jan 24 – 2021

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Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 854.19 to 877.59 (+2.74%) compared to last month update. Currently the Singapore REIT index has started an uptrend after broke the resistance of about 852 and 874.

  • As for now, Short term direction: Up trend. (All 20D, 50D and 200D SMA have started trending up)
  • Immediate Support at 874 (Resistance turned Support)
  • Immediate Resistance at 900, followed by 940.

Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Dec 20, 2020.

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 40 Singapore REITs with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

  • 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, thus yield displayed might be lower.
  • Note 3: REITs highlighted in blue have been updated with the latest the Q4 2020 business updates.
  • Note 4: Capital Mall Trust has merged with Capitaland Commercial Trust and has became Capitaland Integrated Commercial Trust (C38U). Capitaland Commercial Trust is delisted.

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

Do sign up for the REIT screener at only ~$8.33 per month! (limited time only). Normal price $120 per year.

  • Price/NAV increased to 1.01
    • Increased from 0.98 in December 2020
    • Singapore Overall REIT sector is at about fair value now
  • TTM Distribution Yield increased to 5.45%
    • Increased from 5.30% in December 2020
    • After Q3 earning release (and Q4 earnings release for 6 REITs) after factoring in the dividend cut impact caused by COVID-19).
    • About 22.5% of Singapore REITs (9 out of 40) 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.
  • Gearing Ratio at 38.19%. 
    • Increased from 37.63% in December 2020
    • In general, Singapore REITs sector gearing ratio is healthy but started to increase due to the reduction of the valuation of portfolios and increase in borrowing.
  • Most overvalued REITs (based on Price/NAV)
    • Keppel DC REIT (Price/NAV = 2.45)
    • Parkway Life (Price/NAV = 2.08)
    • Mapletree Industrial Trust (Price/NAV = 1.70)
    • Mapletree Logistics Trust (Price/NAV = 1.68)
    • Ascendas REIT (Price/NAV = 1.47)
    • No change from December 2020 for top 5 overvalued REITs ranking
  • Most undervalued REITs (based on Price/NAV)
    • Lippo Malls Indonesia Retail Trust (Price/NAV = 0.23)
    • First REIT (Price/NAV = 0.49)
    • Starhill Global REIT (Price/NAV = 0.64)
    • OUE Commercial REIT (Price/NAV = 0.65)
    • ARA Hospitality Trust (Price/NAV = 0.69)
    • BHG REIT (Price/NAV = 0.71)
  • Highest Distribution Yield REITs (ttm)
    • First REIT (16.94%)
    • Lippo Malls Indonesia Retail Trust (12.62%)
    • KepPacOak US REIT (8.75%)
    • Sasseur REIT (7.61%)
    • EC World REIT (7.51%)
    • ARA LOGOS Logistic Trust (7.48%)
    • 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.
  • Highest Gearing Ratio REITs
    • Eagle Hospitality Trust (65.5%) * Filed for Chapter 11 Bankruptcy Protection *
    • First REIT (49%)
    • ARA Hospitality Trust (43%)
    • Lippo Malls Retail Trust (42.5%)
    • ESR REIT (41.6%)
    • Suntec REIT (41.5%)
    • Capitaland Integrated Commercial Trust (40.6%)
    • ARA Logos Logistic Trust (40.5%)
    • OUE Commercial REIT (40.3%)
    • Mapletree NAC Trust (40.1%)
  • Total Singapore REIT Market Capitalisation = S$107.2 Billion.
    • Increased from S$103.5 Billion in December 2020.
  • Biggest Market Capitalisation REITs:
    • Capitaland Integrated Commercial Trust ($14.89B)
    • Ascendas REIT ($11.75B)
    • Mapletree Logistics Trust ($8.35B)
    • Mapletree Commercial Trust ($7.23B)
    • Mapletree Industrial Trust ($6.86B)
  • Smallest Market Capitalisation REITs:
    • Eagle Hospitality Trust ($119M)
    • First REIT ($198M)
    • United Hamsphire REIT ($286M)
    • BHG Retail REIT ($301M)
    • ARA Hospitality Trust ($386M)
    • Sabana REIT ($395M)
  • Eagle Hospitality Trust is currently suspended

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 Singapore REIT for long term investing for passive income generation.

Top 20 Performers of the Month (Source: https://stocks.cafe/kenny/advanced)

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 1.004%
  • US 10 Year: 1.09%

Summary

Fundamentally the whole Singapore REITs is close to fair value now based on simple average on the Price/NAV. Below is the market cap heat map for the past 1 month. We can see from here Hospitality sector is taking a breather after a strong run up on the previous month, and other small & medium cap REITs (e.g. Keppel REIT, Cromwell European REIT, ARA Logos Logistic Trust, BHG Retail REIT, Prime US REIT) which are playing catch up now due to cheap valuation.

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

Yield spread (reference to 10 year Singapore government bond of 1.004%) widen slightly from 4.407% to 4.449%. However, the risk premium are still attractive to accumulate Singapore REITs in stages to lock in the current price and long term yield after the recovery. Moving forward, it is expected the increase of DPU due to the recovery of global economy.

Technically the REIT Index broke the resistance and started an uptrend. Current macro factors such as low interest rate environment, aggressive M&A for future DPU growth and recovery of global economic support the bullish breakout.

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 on my extensive research and years on Singapore REIT investing experience can approach me separately for REIT Portfolio Consultation.

Kenny Loh is a Senior Consultant 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 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 Fundamental Analysis Comparison Table Jan 24 – 2021