Singapore REITs Monthly Update (March 3rd, 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 676.08 to 653.16 (-3.39%) compared to last month’s update. The REIT index is now trading in a downward channel, with the 20D SMA being the immediate resistance. It has broken the previous low in Oct 2022 (support), and has a new support at 611.

  • Short-term direction: Down
  • Medium-term direction: Down
  • Long-term direction: Down
  • Immediate Support at 611 (previous low in Oct 2023)
  • Immediate Resistance at 20D SMA, followed by 200D SMA

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 10th, 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 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 March 1st, 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 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 0.79 (Weighted Average: 0.79)
    • Increased from 0.75 in February 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)
    • EC World REIT 2.33
      ParkwayLife REIT 1.51
      Keppel DC REIT 1.26
      Capitaland Ascendas REIT 1.24
      Mapletree Industrial Tr 1.22
      Mapletree Logistics Tr 1.04
    • Only 6 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 the latest update. This caused its Price/NAV to skyrocket to 2.33.
  • Most undervalued REITs (based on Price/NAV)
    • Manulife US REIT 0.17
      Keppel Pacific Oak US REIT 0.18
      Prime US REIT 0.19
      Lippo Malls Indonesia Retail Trust 0.27
      ARA Hospitality Trust 0.38
      OUE REIT 0.44

 

Distribution Yields Overview

  • TTM Distribution Yield decreased to 7.96%. (Weighted Average is 6.45%)    
    • Decreased from 8.21% in February 2024. (Weighted Average was 6.32%)
    • 19 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.
    • 7 REITs have a ttm yield of over 10%!
  • Highest Distribution Yield REITs (ttm)
    • Prime US REIT 23.77
      Keppel Pacific Oak US REIT 19.69
      Elite Commercial REIT 13.68
      ARA Hospitality Trust 12.25
      Daiwa House Logistics Trust 12.23
      Cromwell European REIT 10.97
    • Reminder that these yield numbers are based on current prices. This has caused Prime US REIT’s and Keppel Pacific Oak REIT’s ttm yields to be over 25%, despite the distribution cuts/halts.
    • 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 4.69%. (Weighted Average widened slightly to 3.91%)     
    • Tightened from 5.07% in February 2024. (Weighted Average was 3.85%)

 

Gearing Ratios Overview

  • Gearing Ratio increased slightly to 38.76%. (Weighted Average: 37.89%)    
    • Increased from 38.06% of February 2024. (Weighted Average: 37.86%)  
    • 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
    • EC World REIT 58.3
      Manulife US REIT 58.3
      Prime US REIT 48.4
      Lippo Malls Indonesia Retail Trust 44.3
      Keppel Pacific Oak US REIT 43.2
      Suntec REIT 42.3
    • 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 2.87% to S$87.49 Billion.
    • Decreased from S$90.08 Billion in February 2024.
  • Biggest Market Capitalisation REITs (S$):
    • Capitaland Integrated Commercial Trust 12701.50
      Capitaland Ascendas REIT 11913.60
      Mapletree Logistics Tr 7256.20
      Mapletree Pan Asia Commercial Trust 6930.00
      Mapletree Industrial Tr 6395.80
      Frasers Logistics & Commercial Trust 3852.20
    • There are no change in the rankings since November 2022.
  • Smallest Market Capitalisation REITs (S$):
    • Manulife US REIT 104.88
      Lippo Malls Indonesia Retail Trust 115.50
      Elite Commercial REIT 120.74
      Keppel Pacific Oak US REIT 132.08
      Prime US REIT 135.66
      ARA Hospitality Trust 161.90

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 Worst Performers of February 2024

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

SG 10 Year & US 10 Year Government Bond Yield

  • SG 10 Year: 3.11% (increased from 2.98%)
  • US 10 Year: 4.18% (remained at 4.18%)

 

Summary

The past month was a bearish month for S-REITs again. This can be possibly caused by the continued increase in SG/US 10 Years Gov Bond Yields (highly inversely correlated with FTSE ST REIT Index in 2023) and poor earnings release by most of the REITs (which DPU was expected to drop YoY due to the full impact of interest rate hikes). Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.79) value of the S-REITs, with still a very attractive DPU yield of 7.96%! (Weighted average yield of 6.45%). Do take note that NAV and DPU are lagging numbers.

The earnings reporting season has ended for Q4 2023. The following are the summary q-o-q / h-o-h results for the S-REITs:

10 REITs reported an increase in DPU,

19 REITs reported a decrease in DPU,

6 REITs reported no change in DPU.

 

Weighted Average Yield spread (in reference to the 10-year Singapore government bond yield of 3.11% as of 10th February 2023) widened slightly from 3.86% to 3.91%. Based on the CME group’s interest rate futures, there will be a high possibility of rate cut of between 100-150 bps by end of 2024.

Technically the REIT Index has broken the previous support of about 665, and now has a new support at 611 (previous low in Oct 2022).

Trends and Predictions for Singapore REITs 2024

Join us for an enlightening webinar where we delve into the intricate world of Real Estate Investment Trusts (REITs) in Singapore against the backdrop of interest rate movements. Kenny Loh, a Singapore REIT Specialist and Independent Financial Advisor, will meticulously analyse current market trends and offer valuable insights into the potential risks and opportunities that lie ahead for S-REITs in 2024.

Key Topics Covered:

  • Impact of Interest Rate Movements on Singapore REITs Performance
  • Navigating Interest Rate Fluctuations
  • Identifying Emerging Risks and Seizing Opportunities in REITs Sector
  • Actionable Insights for Portfolio Positioning
  • Strategic Success Amidst Interest Rate Scenarios

 

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

Continue ReadingSingapore REITs Monthly Update (March 3rd, 2024)

Money and Me: US Office Reits – the immediate outlook is bleak but there are opportunities for investors

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16th February 2024

Money and Me: US Office Reits – the immediate outlook is bleak but there are opportunities for investors

We take a closer look at the deterioration of the pure play US office Reit sector. With the US Fed interest rate path as vague as ever, which companies are likely to struggle and can investors find attractive opportunities? Michelle Martin asks Kenny Loh, REIT Specialist and Independent Financial Advisor.

 

 
 

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: US Office Reits – the immediate outlook is bleak but there are opportunities for investors

S-REITs Prospects and Opportunities in 2024 (with TFC)

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As interest rates rise and costs increase, Singapore REIT managers are navigating tough waters. We had the opportunity to host a panel of top industry leaders shed light on how they’re adapting – and what savvy investors need to know.

The conversation revolved around the impact of interest rates on Singapore Real Estate Investment Trusts (REITs).

SPECIAL GUEST:

Emelia Tan, Director of Research at the Singapore Exchange (SGX);
Nupur Joshi, CEO of the REIT Association of Singapore (REITAS); and
Kenny Loh, Wealth Advisory Director and REIT Specialist at REITSavvy.

With over 40 years of combined experience between them, the guests were well-positioned to offer valuable perspectives on the issues at hand. Here are some of their biggest takeaways for understanding Singapore REIT performance in the year ahead.

PANELISTS AND THEIR EXPERTISE:

Emelia Tan, known for her extensive research and market analysis at SGX Group, brought her expertise in understanding market updates and data points. Nupur Joshi, as the CEO of REITAS, provided insights from the corporate side and highlighted the association’s role in representing Singapore-listed REITs. Kenny Loh, an experienced REIT investor and advisor, offered a unique perspective as an active participant in the market.

THE IMPACT OF INTEREST RATES ON REITS:

The conversation started with a focus on how interest rates affect the REIT sector. Kenny noted that the market has already absorbed the impact of interest rates, with traders closely monitoring data and correlations between US government bond yields and the REIT sector. He emphasised that the REIT sector is currently in a sideways movement, waiting for earning results and potential market triggers before a potential bull run.

MANAGING THROUGH INTEREST RATE FLUCTUATIONS:

The panel then explored how REIT managers navigate the challenges posed by interest rate fluctuations. Emelia Tan pointed out that REIT managers have to adapt to the current market environment, considering interest rates that are higher than pre-pandemic levels but expected to decline in the future. REIT managers need to reevaluate their portfolios, focusing on divestments and capital allocation strategies to fund acquisitions and asset enhancements.

As interest rates rose sharply last year, Nupur noted “the worst is behind us.” Most panelists agreed rates have likely peaked for now and may start declining. But Emelia cautioned “we are living in a higher for longer environment…capital is still expensive.”

So how are REIT managers coping? Kenny listed popular strategies: “reconstituting portfolios, redevelopment, asset enhancements.” Emelia added some are “releasing more, more, more distribution” or using rights issues to pay down debt. With rising costs in mind, Kenny said ESG initiatives around energy efficiency can help cut utilities and maintenance expenses.

Nupur emphasised the lag some may face, as many interest costs remain locked in at higher rates. But savvy investors can position themselves ahead of the anticipated rate declines. And rates aren’t the only factor – “earnings results will be a kickstart” if no surprises emerge, noted Kenny.

EXPERT OPINIONS AND STRATEGIES:

Throughout the discussion, each panellist shared valuable insights and strategies. Nupur emphasised the importance of collaboration within the REIT ecosystem, highlighting the collective voice of investors and the need for REIT managers to address issues such as corporate actions. Kenny stressed the significance of data from SGX and MLIR (Market Leasehold Interest Rate) in his analysis and portfolio building process.

OVERSEAS EXPANSION AND COMPLEX STRUCTURES

Many Singapore REITs now derive much of their income overseas. But as Reggie asked, does this increased complexity worry investors? Nupur reassured that diversification is part of maturing REIT growth plans.

Kenny weighed in on evaluative factors like targeted regions or property segments, the sponsor’s involvement, and on-the-ground management. And while debt structures can perplex, he highlighted Maple Tree Logistic Trust’s global reach as an example of necessary hedging.

The panel concurred that retail investors need not scrutinise every move. “Trust the manager – how do you trust? Track record,” advised Kenny . As long as core business fundamentals remain sound, overseas diversification should provide growth opportunities.

THE RISING IMPACT OF ESG

When Reggie playfully questioned if retail investors truly cared about ESG, the panel leapt to clarify growing alignment. Emelia noted institutional interest is rising, which will impact returns. Nupur added sustainability efforts now factor into competitive financing alternatives.

But Kenny acknowledged ESG is still nascent for many Asian investors. REIT managers, he acknowledged, must proactively showcase sustainability actions and reporting. Only then can transparency build understanding and trust over time.

For those still skeptical, get ahead of the trends or risk lagging as ESG increasingly influences flows and valuations. Progress today readies REITs and portfolios for the demanding standards of tomorrow.

In summarising the insights, Reggie brought listeners up to speed on the issues constantly evaluated by top REIT managers and experts. Whether navigating volatility, diversifying offerings, or futureproofing through sustainability, their multifaceted perspectives offer invaluable guidance for 2023.

KEY TAKEAWAYS AND MARKET OUTLOOK:

As the conversation drew to a close, the panelists discussed the market sentiment and the varying perspectives of investors. They highlighted the different groups of investors: those who act early, those who wait for news announcements, and those who follow the crowd. The panelists expressed optimism that a positive market catalyst, such as an interest rate cut or better-than-expected earnings results, could potentially trigger a bullish trend in the REIT sector.

 

You can check their full interview on Chills with TFC, Episode 158 on Spotify, YouTube, Google podcast or Apple podcast for a comprehensive understanding of the impact of interest rates on Singapore REITs. The insights shared by industry experts shed light on how REIT managers manage through interest rate fluctuations and adapt their strategies accordingly. As investors eagerly await market triggers, such as earning results and potential interest rate changes, the future of the Singapore REIT market holds promise.

KEY POINTS DISCUSSED:

  1. Interest rates and their correlation with the REIT sector.
  2. The market’s absorption of interest rate data and its impact on REITs.
  3. Strategies employed by REIT managers to navigate interest rate fluctuations.
  4. The importance of collaboration within the REIT ecosystem.
  5. The role of data in REIT analysis and portfolio building.
  6. Varying investor perspectives and their potential impact on the market.
  7. The possibility of a bullish trend in the REIT sector based on market catalysts.

 If you’re still trying to make sense of REIT in a volatile market, check the pro REIT outlook with forecasts and strategies for 2024.

This post first appeared on The Financial Coconut here.

 

Courses: Financial Ratio Analysis and Technical Analysis for REITs with SGX Academy

 
On 2 Saturdays in March (2nd and 9th), I will be conducting 2 courses, for you to get a head start in understanding Singapore REITs. These will be hands-on courses, where I will guide you step-by-step in performing the course content proficiently. This is a very good time to enter! 
 

Financial Ratio Analysis for Singapore REITS (2nd March 2024, 9am to 1pm)

 
You will learn how to:
  • Learn how to assess the financial health of Singapore REITs by analyzing key ratios
  • Identifying financial strengths and weaknesses, enabling them to make informed investment decisions
  • Interpret ratios and understand what are the operation factors which can affect the ratio in future
  • Learn how to use valuation ratios to determine the fair value of Singapore REITs and assess their sustainability.
  • Identify undervalued or overvalued REITs, aiding them in making sound investment choices. 

Cost: $467  –> $373  (20% discount if you use this link!)

Venue: SGX Academy Room. 2 Shenton way
SGX Centre 1. Level 2, S068804

Laptop is required. Please bring your own laptop for the training.

 

Technical Analysis for Singapore REITS (9th March 2024, 9am to 1pm)

 
You will learn how to:
  • Learn how to effectively use chart patterns, identify support and resistance to analyze Singapore REITs’ price movements
  • Identify trends and make informed investment decisions
  • Gain insights into market psychology and sentiment analysis
  • Gauge the overall market sentiment and make better predictions about future price movements of Singapore REITs
  • Learn how to develop and implement trading strategies based on technical analysis

Cost: $467 –> $373 (20% discount if you use this link!)

Venue: SGX Academy Room. 2 Shenton way
SGX Centre 1. Level 2, S068804

Laptop is required. Please bring your own laptop for the training

TA REITs Course 9 Mar 2024

For more information, check out the link below to sign up for the course.

https://www.sgxacademy.com/event/technical-analysis-for-singapore-reits/

 

REITsavvy: Your one-stop platform for REITs educational content and screener

I have just launched a new REIT education platform with a REITs screener, named REITsavvy. It contains not just a comprehensive REITs screener, but also REITs related educational content + news and latest insights.
 
The latest news and insights include exclusive interviews with REIT managers, gaining insights on their management decisions, as well as additional REITs analysis performed that my team that may not be posted here on mystocksinvesting.
 
Latest insights on REITs.
 
 
Yield vs. Price/NAV Bubble chart. A quick overview of the 38 S-REITs.
 
Also included is a comprehensive, live-updated REITs screener. No more searching for individual REIT results and interpreting financial statements. On the REITsavvy screener, gain access to all the REIT data you need for an informed investment decision. At one glance, toggle between multiple charts for an overview of the 38 S-REITs. With REITsavvy, you can conduct all your investing research in one platform so you can find more winning REITs in lesser time.
 
 
overview
Clear overview of the entire REITs market, including trends, in a single interface for investing into strength and momentum.

 

 

Try it now!

 

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

Continue ReadingS-REITs Prospects and Opportunities in 2024 (with TFC)