Despite the Covid-19 pandemic significantly impacting REIT prices, some REITs have rebounded to close to their 5 years Price/NAV high. In this article we will be discussing the 5 S-REITs trading at close to their 5 years high, in terms of Price/NAV, at the time of writing (14 April 2021).
Do note that despite being at their 5 years high (in terms of Price/NAV) this does not mean that the REIT is overvalued. A REIT can be undervalued (<1 Price/NAV) but still be trading at an all-time high. All data is taken from the StocksCafe REIT screener at the time of writing.
5 REITs at their 5 years Price/NAV high
Below are the 5 REITs trading at their 5 years high.
REIT Price/NAV Graph and Portfolio Overview
Below are the overview of the REITs. Do note that the NAV value changes every quarter/semi-annually, depending on the data provided by the individual REITs in their results release.
ARA Logos Logistics Trust is a REIT comprising of 100% Industrial and Logistics Properties. It has 27 logistics warehouse properties, with 10 in Singapore and the remaining 17 in Australia. It has a total portfolio valuation of S$1,281 million.
Keppel REIT comprises of interests in ten Grade A commercial office assets with 3 located in Singapore (4 after Keppel Bay Tower acquisition), 6 in Australia (Sydney, Melbourne, Brisbane and Perth) and 1 in Seoul, South Korea. It has a total portfolio valuation of S$8,861 million, the largest in this comparison.
Lendlease Global Commercial REIT comprises of a leasehold interest in one retail property in Singapore (313 Somerset) and three freehold office properties located in Milan, Italy. It has a total portfolio valuation of S$1,452 million.
Sabana REIT has a portfolio of 18 industrial buildings located entirely in Singapore. They are divided into 4 categories, namely high-tech industrial, chemical warehouse & logistics, warehouse & logistics, and general industrial. It has a total portfolio valuation of S$840.1 million, the smallest in this comparison.
ParkwayLife REIT is Asia’s largest listed healthcare REIT, with 53 properties. It comprises of 3 Hospitals in Singapore, 1 Medical Office Building in Kuala Lumpur, Malaysia, and the remaining in Japan as Nursing Homes. has a total portfolio valuation of S$2,002 million.
Fundamental Ratios
The above table shows the corresponding fundamental ratios of the 5 REITs. Some observations that can be made are shown below:
- Yield (ttm): The yield of the 5 REITs are diverse, ranging from 3.33% up to 7.05%.
- Gearing: The Gearing ratios of the REITs range from 33.5% to 39%. One thing that is worth observing is that these 5 REITs, that are trading at close to their 5 years high, none of them have gearing ratios of above 39%.
- Price/NAV: Despite trading at close to their 5 years high, Keppel REIT, Lendlease REIT and Sabana REIT are slightly undervalued.
- Some of you might wonder how is Sabana REIT trading at close to its 5 years high in Price/NAV, despite it dropping in price over the past 5 years. The chart below shows Sabana REIT’s price over 5 years.
- This is because the Net Asset Value (NAV) of Sabana REIT has been dropping over the past 5 years as well. In layman terms, NAV = (Assets – Liabilities) / Total no. of shares. In Q1 2015, each share’s net asset value is S$1.06, but in Q4 2020, it is only S$0.51.
- Some of you might wonder how is Sabana REIT trading at close to its 5 years high in Price/NAV, despite it dropping in price over the past 5 years. The chart below shows Sabana REIT’s price over 5 years.
Lease Management
The above table shows the corresponding lease management values of the 5 REITs. Some observations that can be made are shown below:
- No. of Properties: ParkwayLife REIT has the most no. of properties, with 54. Sabana REIT is the only REIT in this comparison with a portfolio wholly in Singapore.
- Occupancy Rate: Sabana REIT has noticeably a lower occupancy rate than the other 4 REITs, at 76.5%.
- Weighted Average Lease Expiry (WALE): The 2 Industrial/Logistics REITs have lower WALEs at 2.8 years and 3.1 years respectively. The other 3 REITs in the other sectors have WALEs all above 4.9 years.
- Property Portfolio Value: Keppel REIT has the largest Portfolio value by a large margin at S$8.86 billion.
Debt Management
The above table shows the corresponding lease management values of the 5 REITs. Some observations that can be made are shown below:
- Weighted Average Debt Maturity (WADM): Sabana REIT has the lowest WADM of only 1.2 years, while the other 4 REITs have a WADM of about 3 years.
- Interest Cost/Cost of Debt: Lendlease REIT and ParkwayLife REIT have a very low Cost of Debt of less than 0.9%. The other 3 REITs have Cost of Debts hovering around 2 to 3%.
- Interest Coverage Ratio: Lendlease REIT and ParkwayLife REIT have considerably higher ICRs with 8.5 and 18.1 respectively. The other 3 REITs have an ICR of around 3 to 4.
- Unsecured Borrowings: All of Sabana REITs borrowings are secured.
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
