Money and Me: Data Centered S-REITs; here is what you need to know

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21 November 2024

Money and Me: Data Centered S-REITs; here is what you need to know 

Join Michelle Martin as she explores the buzzing S-REITs sector with a focus on data centres! Hosted by Michelle Martin with guest Kenny Loh, REIT Specialist and Independent Financial Advisor, who starts with a surprising answer on who he sees as top performers among S-REITs over the past month – he has none in his sights! After parsing the laggards, Michelle and Kenny discuss Keppel DC REIT’s landmark $1.38 billion acquisition of AI-ready data centres and its implications for the regional investment landscape. Discover the driving trends behind data centre demand and their investment potential in a shifting interest rate environment. Plus, hear insights on how to position your portfolio as 2024 wraps up. It’s a deep dive into the present and possible future performance of a segment of the market that is powering the AI wave you don’t want to miss!

 

 
 

Note: The above analysis are my own personal views and are NOT buy or sell recommendations. 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.

 

Listen to his previous market outlook interviews here:

2024

2023

2022

2021

2020

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 ReadingMoney and Me: Data Centered S-REITs; here is what you need to know

Singapore REITs Monthly Update (November 10th, 2024)

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Technical Analysis of FTSE ST REIT Index (FSTAS351020)


FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 700.03 to 649.94 (-7.15%) compared to last month’s update. Singapore REITs is currently going through a correction, moving towards a  support zone at about 630-640.

  • Short-term direction: Down
  • Medium-term direction: Down
  • Long-term direction: Sideways
  • Immediate Support: Blue Support Line
  • Immediate Resistance: 200D SMA

FTSE REIT Index Chart (2 years)

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on October 12th, 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.
  • All REITs have the latest Q2 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.

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 November 9th, 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 0.87 (Weighted Average: 0.87)
    • Decreased from 0.91 in October 2024.
    • Singapore Overall REIT sector is slightly undervalued
  • Most overvalued REITs (based on Price/NAV)
    Keppel DC REIT 1.58
    ParkwayLife REIT 1.56
    Mapletree Industrial Tr 1.23
    Capitaland Ascendas REIT 1.19
    AIMS APAC REIT 0.97
    Mapletree Logistics Tr 0.96

    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 0.30
    Acrophyte Hospitality Trust 0.31
    Keppel Pacific Oak US REIT 0.32
    Lippo Malls Indonesia Retail Trust 0.39
    OUE REIT 0.43

Distribution Yields Overview

  • TTM Distribution Yield increased to 6.50%. (Weighted Average increased to 6.25%)    
    • Increased from 6.23% in October 2024. (Weighted Average was 5.91%)
    • 15 of 38 Singapore REITs have ttm distribution yields of above 7%.
  • Highest Distribution Yield REITs (ttm)
    Acrophyte Hospitality Trust 12.45
    IREIT Global 11.49
    EC World REIT 9.24
    First REIT 9.23
    Elite UK REIT 9.10
    Cromwell European REIT 9.01

    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 3.69%. (Weighted Average remained similar at 4.02%)     
    • Widened from 3.40% in October 2024. (Weighted Average was 4.01%)
    • 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 39.74%. (Weighted Average: 38.69%)
    • Increased from 39.12% in October 2024. (Weighted Average: 38.28%)  
    • Gearing Ratios are updated quarterly. 31 of 37 REITs have their gearing ratios updated for 3Q 2024.
    • 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 57.9
    Prime US REIT 48.1
    Elite UK REIT 45.1
    Lippo Malls Indonesia Retail Trust 45.0
    Acrophyte Hospitality Trust 43.5

    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 decreased by 6.15% to S$86.77 Billion.
    • Decreased from S$92.46 Billion in October 2024.
  • Biggest Market Capitalisation REITs (S$m):
    Capitaland Integrated Commercial Trust 13265.98
    Capitaland Ascendas REIT 11476.17
    Mapletree Pan Asia Commercial Trust 6523.64
    Mapletree Logistics Tr 6458.88
    Mapletree Industrial Tr 6000.84
    Frasers Centrepoint Trust 3834.93
  • Smallest Market Capitalisation REITs (S$m):
    Acrophyte Hospitality Trust 124.70
    Lippo Malls Indonesia Retail Trust 169.33
    Manulife US REIT 178.00
    Elite UK REIT 178.23
    Prime US REIT 214.51
    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.

 

Top 20 Best/Worst Performers of October 2024


Source: https://screener.reitsavvy.com/

 

 

SG 10 Year Government Bond Yield

  • SG 10 Year: 2.82% (remained at 2.82%)

 

Summary


Singapore REITs is currently having a pullback due a spike in US 10 years risk free rate to 4.3% (from ~3.8% early October) as the market fears the return of inflation with Trump 2.0 tariff policy.   

Fundamentally, the S-REIT sector is trading at a 13% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.50%. 

According to the current Fed Fund Rate projections from the CME Group, the market expect another 25 basis point cut by end 2024, with a total reduction of about 100 basis points  cut from the peak of the interest rate cycle. 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 of the next 1 to 2 quarter. The current weakness of the S-REIT sector will continue to be shadowed by the US 10 Year Risk Free rate which have has very strong inversed correlation with the REIT index.

 

 

US 10 Year Risk Free Rate

 

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

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(Seminar) Unlocking Yield: Mastering Your Portfolio in a New Rate Era

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Join us for Part 2 of our three-part series, “𝐔𝐧𝐥𝐨𝐜𝐤𝐢𝐧𝐠 𝐘𝐢𝐞𝐥𝐝: 𝐌𝐚𝐬𝐭𝐞𝐫𝐢𝐧𝐠 𝐘𝐨𝐮𝐫 𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐢𝐧 𝐚 𝐍𝐞𝐰 𝐑𝐚𝐭𝐞 𝐄𝐫𝐚,” in collaboration with PhillipCapital B2B Team. This seminar will focus on tracking interest rate cuts and exploring investment opportunities to secure yields as T-bill rates are expected to drop in the coming months.



I’ll be sharing various investment options in anticipation of further rate cuts in 2025 and how to build a diversified portfolio comprising different asset classes to optimize risk-adjusted returns. We’re excited to have David Z Wang from Helicap as our guest speaker. I call him Mr. 10 Percent, as his fund has consistently delivered around 10% returns over the past few years. Hear from him firsthand on how he and his team achieve such consistent performance.

Join us at Phillip Securities Pte Ltd (PSPL) at 250 North Bridge Road, #06-00 Raffles City, for an insightful event where you can learn how to navigate your portfolio in this new rate era. Our experts will share valuable insights and strategies to help you unlock maximum yield from your investments. Don’t miss out on this opportunity to master your portfolio! See you there.

👇Register here:
https://lnkd.in/gcYrh7YR

📅 Date: Oct 21, 2024 (Monday)
⏱️Time: 7:00pm to 9:00pm
📍Venue: Phillip Securities Pte Ltd (PSPL)
250 North Bridge Road, #06-00 Raffles City

Registration starts at 6:30pm.

𝐒𝐩𝐞𝐚𝐤𝐞𝐫𝐬 𝐏𝐫𝐨𝐟𝐢𝐥𝐞
Kenny Loh, CFP® AEPP® IBFA MBA is a Wealth Advisory Director specializing in holistic investment planning and estate management. He helps clients grow their investment capital and create passive income for retirement. I also facilitate tax-efficient portfolio transfers to beneficiaries, ensuring tax-free capital appreciation and optimized wealth transfer through strategic asset structuring. Additionally, Kenny is also a SGX Academy trainer specializing in S-REIT investing and he presents his view monthly on MoneyFM89.3.

David Wang is the Co-Founder and Group CEO of Helicap, a leading FinTech private investments firm. With over a decade of experience in finance and technology, David has been instrumental in driving innovation and growth in the alternative investment space. Under his leadership, Helicap has emerged as a pioneering platform that connects investors with robust investment opportunities across various asset classes.

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