Singapore REIT Fundamental Analysis Comparison Table – 2 January 2020

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Happy New Year 2020! The start of a new decade!

 

Technical Analysis of FTSE ST REIT Index (FSTAS8670)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) is currently trading within Symmetrical Triangle.  The REIT index has changed from 905.48 (last post) to 926.24 (+.2.29%).Based on the current chart pattern,  the REIT index is trading within a consolidation range waiting for breakout. Probable direction for REIT index: Side way to Up. Also take note of the Multiple Tops formation which is a trend reversal pattern. Previous chart on FTSE ST REIT index can be found in the last post Singapore REIT Fundamental Comparison Table on Dec 16, 2019.

 

Fundamental Analysis of 40 Singapore REITs

The following is the compilation of 40 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. DPU Yield for Eagle Hospitality Trust and Prime US REIT are  projection based on the IPO prospectus.  OUE Hospitality Trust is removed after merged into OUE Commercial REIT. Lendlease Global Commercial REIT is not included in this table. Fortune HKD REIT is removed as the REIT has been delisted. This is the last tracking data of Ascendas Hospitality Trust before merging into Ascott Residence Trust.

 

  • Price/NAV increase from 1.08 to 1.10 (Singapore Overall REIT sector is over value now).
  • Distribution Yield decreases from 6.28% to 6.19% (take note that this is lagging number). About 25% of Singapore REITs (10 out of 40) have Distribution Yield > 7%.
  • Gearing Ratio maintains at 35.2%.  24 out of 40 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy. Note: The current limit of gearing ratio for REITs listed in Singapore Stock Exchange is 45% but there is a consultation paper by SGX to review the potential increase to 50-55% limit.
  • The most overvalue REIT is Keppel DC REIT (Price/NAV = 1.91), followed by Parkway Life (Price/NAV = 1.80), Ascendas REIT (Price/NAV = 1.45), Mapletree Industrial Trust (Price/NAV = 1.68), Mapletree Logistic Trust (Price/NAV = 1.49), Mapletree Commercial Trust (Price/NAV = 1.41) and Frasers Logistics & Industrial Trust (Price/NAV = 1.31)
  • The most undervalue (base on NAV) is Eagle Hospitality Trust (Price/NAV =0.61), followed by  Lippo Malls Indonesia Retail Trust (Price/NAV = 0.72).
  • The Highest Distribution Yield (TTM) is Eagle Hospitality Trust (11.74%) followed by SoilBuild BizREIT (9.13%), Lippo Mall Indonesia Retail Trust (8.93%), EC World REIT (8.2%), First REIT (8.64%) and Cache Logistic Trust (7.9%).
  • The Highest Gearing Ratio are ESR REIT (41.6%), OUE Comm REIT (40.5%), Far East HTrust (39.6%) and EC World REIT (39.6%).
  • Top 5 REITs with biggest market capitalisation are Ascendas REIT ($9.25B), CapitaMall Trust ($9.07B), Capitaland Commercial Trust ($7.68B), Mapletree Commercial Trust ($6.92B) and Mapletree Logistic Trust ($6.33B)
  • The bottom 3 REITs with smallest market capitalisation are BHG Retail REIT ($348M), Sabana REIT ($484M) and iREIT Global REIT ($516M)

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 REIT for long term investing for passive income generation.

 

  • 1 month increases from 1.73933% to 1.74833%
  • 3 month increases from 1.76731% to 1.77250%
  • 6 month decreases from 1.82864% to 1.82763%
  • 12 month decreases from 1.96792% to 1.96692%

Summary

Fundamentally the whole Singapore REITs is over value now based on simple average on the Price/NAV. The big cap REITs are still quite expensive after the recent correction. Most of the DPU yield for big cap REIT is below 5% now such as CapitaCom Trust, CapitaMall Trust, Fraser Centerpoint Trust, Keppel DC REIT, Keppel REIT, Parkway Life REIT, Mapletree Com Trust, Mapletree Logistics Trust and Mapletree Industrial Trust. The distribution yield of ParkwayLife REIT and Mapletree Commercial Trust have dropped below 4%. However, the yield remains attractive compared to other fixed income asset classes like corporate bonds and government bonds. The yield spread between big cap and small cap REIT remains wide.

Yield spread (reference to 10 year Singapore government bond of 1.759%) has tightened from 4.495% to 4.431%.  The risk premium for small cap REIT is very attractive as compared to big cap REITs. This indicates value picks only in small and medium cap REITs.

Below chart is the comparison between FTSE ST REIT Index, FTSE ST Financial Index and Straits Time Index (STI). REIT (+19.11%) has way out-performed the financial sector (+11.61%) and STI (+6.81%).

Current macro factors are expected to continue to support the bull run of REIT index, there are, (1) low interest rate environment (2) potential relax of gearing ratio to 50-55% limit (3) TINA (There Is No Alternative) for other high yield asset classes. The positive sentiment may entice Singapore REITs to take on more debt to grow the current portfolio. Combining the above Macro & Technical Analysis, Singapore REIT is expected to continue to do well in 2020.

In addition, S-REIT has the Best Risk Adjusted Return (Dividend) compared to other asset classes and indices.

If you want a “Sleep Well” Dividend  Paying Portfolio to make your money works harder for you, Singapore REIT is one of the asset classes you must have in your investment portfolio. Of course, you have to learn more about the fundamental of REITs, the behaviors of the REITs, and pro/cons of the REITs.

My next Singapore REIT investing course is planned on April 18, 2020. You can register here. https://mystocksinvesting.com/course/singapore-reits-investing/

If you do not have time to learn all the basic, or you want to kick start your REIT portfolio within 1 month, I can help you to construct a REIT portfolio with a fee.  You can just sit back, relax and wait for the dividend to come it as I will be doing all the job in managing your REIT portfolio. For REIT Portfolio Consultation, please drop me an email marubozu@mystocksinvesting.com

 

I wish everyone a prosperous 2020 New Year!

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2 thoughts on “Singapore REIT Fundamental Analysis Comparison Table – 2 January 2020”

  1. Hi, would you be able to release the reits table before Monday.

    Seems like the big sell off in US market can uncover opportunities at the moment.

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