Disclaimer: This article is based on observations on past trends. It is not a prediction on future events that may happen in the REITs space. Please seek your financial advisor for advice.

According to Investopedia, Net Asset Value is equal to a fund’s or company’s total assets minus liabilities, divided by no. of shares. In other words, NAV = (Assets – Liabilities) / Total number of outstanding shares. NAV is usually calculated by REITs semi-annually or quarterly. Using individual REIT data and data from the StocksCafe REIT screener, below are 5 REITs whose Net Asset Value is on a downtrend since Q1 2015. The below table shows the % Reduction in NAV in 6 years, between Q1 2015 and Q1 2021.

Below is an overview of the 5 REITs listed above, sorted according to the highest loss in NAV since Q1 2015. An NAV chart is also provided. The charts are taken from the StocksCafe REIT screener.

Lippo Malls Indonesia Retail Trust

LMIR Trust comprises 29 Retail properties, wholly in Indonesia, with a total portfolio valuation of S$1,791.5 million. Its NAV decreased from 0.42 in Q1 2015 to 0.10 in Q1 2021. LMIR Trust held a right issue in Q1 2021.

Sabana REIT

Sabana REIT comprises 18 industrial properties, wholly in Singapore, with a total portfolio valuation of S$840.1 million. Its NAV decreased from 1.06 in Q1 2015 to 0.51 in Q1 2021. although its NAV remained relatively stable, hovering around 0.55, since Q1 2017.

First REIT

First REIT comprises 20 healthcare properties comprising 16 hospitals located in Indonesia, three nursing homes in Singapore, and one hospital in South Korea. Its total portfolio valuation is S$939.7 million. Its NAV remained stable until Q4 2020, where a rights issue was carried out, dropping its NAV to 0.50.

OUE Commercial REIT

OUE Commercial REIT’s portfolio comprises seven properties in the Office, Retail and Hospitality sectors, with properties in Singapore and Shanghai, and a total portfolio valuation of S$6,524.8 million. Its NAV decreased from 1.11 in Q1 2015 to 0.58 in Q1 2021.

ARA LOGOS Logistics Trust

ARA LOGOS Logistics Trust (formerly Cache Logistics Trust) portfolio comprises 31 logistics warehouse properties, with 10 located in Singapore and 21 located in Australia. Its NAV decreased from 0.98 in Q1 2015 to 0.58 in Q1 2021. In Q1 2020, ARA Asset Management completed the acquisition of a majority stake in LOGOS, and Cache Logistics Trust was renamed to its current name.

As there are REITs with a decreasing NAV trend, there are also REITs with an increasing NAV trend for the past 5 years. This is beneficial for us investors, as when NAV increases, so does the share price. An example is Keppel DC REIT.

Its NAV increased from 0.87 in Q1 2015 to 1.18 in Q1 2021, an increase of 35.59%. So does its price, which has also seen a large increase from S$0.96 in Q1 2015 (taken 2 Jan 2015) to S$2.58, increasing by 168%.

There are other REITs that have an increasing NAV trend. You can find other REITs with increasing NAV trends in the StocksCafe REIT screener. Happy hunting!

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, 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 an invited speaker of REITs Symposium and Invest Fair. Kenny Loh also offers REIT Portfolio Advisory for a fee. Do contact him at kennyloh@fapl.sg 

Disclaimer: This article is based on observations on past trends. It is not a prediction on future events that may happen in the REITs space. Please seek your financial advisor for advice.

A number of REITs issued rights in the past year or so, including First REIT. Hence, we will be taking a look at REITs that are more likely to have rights issue in the near term to reduce the gearing/leverage ratio to meet the SGX maximum gearing criteria of 50%. Using the StocksCafe REIT screener, we will be selecting REITs with >40% gearing ratio, >3% Weighted Average Cost of Debt and <3 Interest Coverage Ratio (ICR).

By selecting the filters above, there are 3 REITs fulfilling these criteria, namely ARA Hospitality Trust, Lippo Malls Indonesia Retail Trust, and OUE Commercial Trust. We will not be covering Eagle Hospitality Trust as it is still currently suspended.

Below is an overview of the 3 REITs, followed by a comparison table of the Gearing Ratio, Weighted Average Cost of Debt and ICR.

Listed on SGX on the 9 May 2019, ARAHT is the first pure-play U.S. hospitality trust listed in Asia. ARA US Hospitality Trust comprises 41 upscale select-service hotels, totaling 5,340 guest rooms across 22 states in the United States. Its total portfolio valuation is about US$700 million. Its sponsor is ARA Asset Management, which is also the sponsor for ARA LOGOS Logistics Trust and Suntec REIT.

As of the latest Q1 2021 Business Updates, its gearing ratio is 49% and Weighted Average Cost of Debt is 3.40%. Interest Coverage Ratio (ICR) value is not provided.

Lippo Malls Indonesia Retail Trust is first listed on SGX on 19 November 2007. Its portfolio comprises 29 Retail properties in Indonesia, with a total portfolio valuation of S$1,791.5 million. Its sponsor is Lippo Karawaci, which is also the sponsor for First REIT. LMIR Trust has recently raised S$281m in a rights issue in Q1 2021, with the funds used to purchase Lippo Mall Puri in Jakarta.

As of the latest Q1 2021 Business Updates, its gearing ratio is 41.7%, Weighted Average Cost of Debt is 6.54% and Interest Coverage Ratio (ICR) is 1.3x.

OUE Commercial REIT is first listed on SGX on 27 January 2014. Its portfolio comprises seven properties in the Office, Retail and Hospitality sectors, with properties in Singapore and Shanghai, with a total portfolio valuation of S$6,524.8 million. Its sponsor is OUE Limited.

As of the latest Q1 2021 Business Updates, its gearing ratio is 40.4%, Weighted Average Cost of Debt is 3.10% and Interest Coverage Ratio (ICR) is 2.6x.

Gearing Ratio of ARAHT highest among currently trading S-REITs

One observation is that ARA Hospitality Trust’s Gearing Ratio has gone up considerably since Q1 2020, which is also the start of the COVID-19 pandemic. It has gone up from 32.1% in Q4 2019, to 49% in Q1 2021.

Most Recent Rights Issue: First REIT

Other than LMIR Trust, another REIT that has undergone a rights issue is First REIT in Q1 2021. In order to raise S$158.2mil, 791,062,223 new units have been issued, of which S$140.1 million (equivalent to 88.6% of the gross proceeds of the Rights Issue) has been used to repay loans (specifically part of the 2018 Secured Loan Facilities).

From the Gearing History chart in the StocksCafe REIT screener, we can see that First REIT’s gearing ratio reached 49.0% in Q4 2020, close to SGX’s gearing limit of 50% before the rights issue brought the gearing ratio down to around 35%.

Interested in the StocksCafe REIT screener that is used in the above comparison? Click here for more information, and make an informed investment decision in Singapore REITs! 

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Want to invest in Singapore REITs but don’t know how to start? Or not happy with your current investment portfolio? Contact Kenny here at kennyloh@fapl.sg.

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, 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 an invited speaker of REITs Symposium and Invest Fair. Kenny Loh also offers REIT Portfolio Advisory for a fee. Do contact him at kennyloh@fapl.sg