Fundamental Analysis of 41 Singapore REITs
The following is the compilation of 41 REITs in Singapore with colour coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.
- Note 1: The Financial Ratio are based on past data and there are lagging indicators.
- Note 2: This REIT table takes into account the dividend cuts due to COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower.
- Note 3: Currently we are entering into Singapore REITs quarterly earning season, REITs data like CCT, CMT, MCT, MLT, KDC, SPHREIT, KepPacOak US REIT, SuntecREIT have been updated.
- Price/NAV decreased from 0.96 to 0.92 (Singapore Overall REIT sector is undervalued now).
- Distribution Yield decreased slightly from 6.49% to 6.82% (take note that this is lagging number with better visibility after Q2 earning release). About 39.0% of Singapore REITs (16 out of 41) have Distribution Yield > 7%. Do note that these yield numbers are based on current prices taking into account the delayed distribution/dividend cuts due to COVID-19.
- Gearing Ratio increases from 36.61% to 36.68%. In general, Singapore REITs sector gearing ratio is healthy. Note: Gearing may be affected (i.e. potential increase) as the valuation of the portfolio would be reduced.
- The most overvalued REITs are Keppel DC REIT (Price/NAV = 2.59), followed by Mapletree Industrial Trust (Price/NAV = 1.94), Parkway Life (Price/NAV = 2.09), Mapletree Logistic Trust (Price/NAV = 1.71) and Ascendas REIT (Price/NAV = 1.45).
- The most undervalued REITs (based on NAV) are Eagle Hospitality Trust* (Price/NAV =0.17), followed by Lippo Malls Indonesia Retail Trust (Price/NAV = 0.31), ARA Hospitality Trust (Price/NAV = 0.40), First REIT (Price/NAV = 0.42), Starhill Global (Price/NAV = 0.55) and Frasers Hospitality Trust (Price/NAV = 0.65)
- The Highest Distribution Yield (TTM) is First REIT (16.10%), followed by Lippo Malls Indonesia Retail Trust (15.41%), ARA Hospitality Trust (9.34%), KepPacOak US REIT (8.57%), Prime US REIT (8.44%) and ESR REIT (8.43%). Reminder that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19. Some REITs opted for semi annual reporting and thus no quarterly DPU was announced.
- The Highest Gearing Ratio REITs are ARA US Hospitality Trust (42.5%), ESR REIT (41.8%), Suntec REIT (41.3%), ARA Logos Log Trust (40.4%) (previously Cache Log Trust) and OUE Commercial REIT (40.1%)
- Total Singapore REIT Market Capitalisation = S$99 Billion.
- Top 5 REITs with biggest market capitalisation are Ascendas REIT ($11.15B), Mapletree Industrial Trust ($7.40B), Mapletree Logistics Trust ($7.81B), CapitaMall Trust ($6.94B) and Mapletree Commercial Trust ($6.30B).
- The bottom 5 REITs with smallest market capitalisation are Eagle Hospitality Trust ($119M), BHG Retail REIT ($281M), United Hamsphire REIT ($286M), ARA Hospitality Trust ($235M) and Elite Commercial REIT ($376M)
- *Eagle Hospitality Trust is currently suspended
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.
Top 20 Performance of the Month (Source: https://stocks.cafe/kenny/advanced)
SG 10 Year & US 10 Year Government Bond Yield
- SG 10 Year: 1.0%
- US 10 Year: 0.87%
Fundamentally the whole Singapore REITs is undervalued now based on simple average on the Price/NAV. Below is the market cap heat map for the past 1 month.
Retail & Hospitality sectors, small & medium cap REITs are very attractive based on the NAV. However, do take note that NAV would probably be adjusted downward caused by the devaluation of property value. We have already seen the NAV of some REITs are adjusted downward and the increase of gearing ratio, from the latest earning release or business update.
Yield spread (reference to 10 year Singapore government bond of 1.0%) has widen slightly from 5.608% to 5.82%. The risk premium are still attractive to accumulate Singapore REITs in stages to lock in the current price and long term yield after the recovery.
Technically the REIT Index is currently trading on sideway consolidation with low volatility until the breakout. The breakout may happen in the current earning season in October. Current macro factors such as low interest rate environment and recovery of global economic support the bullish breakout.
Listen to the most recently Singapore REIT Market Update on Money and Me: Yield Generating Asset Class here.
Note: This above analysis is for my own personal research and it is NOT a buy or sell recommendation. Investors who would like to leverage on my extensive research and years on REIT investing experience can approach me separately for REIT Portfolio Consultation.
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 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 Sympsosium and Invest Fair. You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement