Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 853.56 to 820.69 (-3.85%) compared to last month’s update. FTSE REIT Index is currently trading within the 800-822 range.
- Support Lines: Blue
- Resistance Lines: Red
- Short-term direction: Sideways
- Medium-term direction: Sideways
- Long-term direction: Sideways
- Immediate Support at 800
- Immediate Resistance at 822, followed by 890
Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on May 1st, 2022.
Fundamental Analysis of 39 Singapore REITs
The following is the compilation of 39 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 there are lagging indicators.
- This REIT table takes into account the dividend cuts due to the 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 for more affected REITs.
- All REITs are updated with the latest Q1 2022 business updates/earnings.
- Digital Core REIT’s yield is extracted from the IPO Prospectus, calculated based on *Estimated DPU (calculated from the Prospectus) / Current Price.
- ESR REIT and ARA LOGOS Logistics Trust has merged to form ESR-LOGOS REIT. ALOG REIT is no longer shown, shown values are for ESR REIT.
Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced
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.
- Most REITs are green since it is compared to FY20/21 as the base (during the pandemic)
- Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of June 3rd, 2022
- Digital Core REIT: Yield calculated from IPO Prospectus.
- Gearing (%): Leverage Ratio.
- Price/NAV: Price to Book Value. Formula: Current Price (as of June 3rd, 2022) 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 decreased to 0.95.
- Decreased from 0.99 from May 2022.
- Singapore Overall REIT sector is undervalued now.
- Take note that NAV is adjusted upwards for some REITs due to pandemic recovery.
- Most overvalued REITs (based on Price/NAV)
- Parkway Life REIT (Price/NAV = 2.08)
- Keppel DC REIT (Price/NAV = 1.54)
- Mapletree Industrial Trust (Price/NAV = 1.34)
- Ascendas REIT (Price/NAV = 1.17)
- Mapletree Logistics Trust (Price/NAV = 1.12)
- Elite Commercial REIT (Price/NAV = 1.11)
- No change to the Top 3 compared to the March to May updates.
- Most undervalued REITs (based on Price/NAV)
- BHG Retail REIT (Price/NAV = 0.58)
- Lippo Malls Indonesia Retail Trust (Price/NAV = 0.58)
- EC World REIT (Price/NAV = 0.67)
- OUE Commercial REIT (Price/NAV = 0.69)
- ARA Hospitality Trust (Price/NAV = 0.70)
- Starhill Global REIT (Price/NAV = 0.74)
- No change to the Top 3 compared to the May updates.
Distribution Yields Overview
- TTM Distribution Yield increased to 6.30%
- Increased from 6.00% in May 2022.
- 14 of 40 Singapore REITs have distribution yields of above 7%. (Same as last month’s update)
- 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.
- Highest Distribution Yield REITs (ttm)
- United Hampshire REIT (10.08%)
- EC World REIT (9.86%)
- Prime US REIT (9.48%)
- First REIT (9.19%)
- Keppel Pacific Oak REIT (9.06%)
- Manulife US REIT (8.81%)
- 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.
- A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.
- Yield Spread increased to 3.47%.
- Increased from 3.44% in May 2022.
Gearing Ratios Overview
- Gearing Ratio decreased to 36.83%.
- Decreased from 37.05% in May 2022.
- Gearing Ratios are updated quarterly. Therefore all REITs have Q1 2022 updates which have updated gearing ratios.
- In general, Singapore REITs sector gearing ratio is healthy but increased due to the reduction of the valuation of portfolios and an increase in borrowing due to Covid-19.
- Highest Gearing Ratio REITs
- ARA Hospitality Trust (44.9%)
- Suntec REIT (43.3%)
- Lippo Malls Indonesia Retail Trust (42.9%)
- Manulife US REIT (42.8%)
- Elite Commercial REIT (42.8%)
- Frasers Hospitality Trust (42.3%)
- No change to the Top 3 compared to the April and May update.
Market Capitalisation Overview
- Total Singapore REIT Market Capitalisation decreased by 2.75% to S$109.16 Billion.
- Decreased from S$112.25 Billion in May 2022.
- Biggest Market Capitalisation REITs:
- Capitaland Integrated Commercial Trust ($14.65B)
- Ascendas REIT ($11.71B)
- Mapletree Logistics Trust ($7.95B)
- Mapletree Industrial Trust ($6.67B)
- Mapletree Commercial Trust ($5.96B)
- Frasers Logistics & Commercial Trust ($4.94B)
- No change in Top 5 rankings since August 2021.
- Smallest Market Capitalisation REITs:
- BHG Retail REIT ($272M)
- ARA US Hospitality Trust ($383M)
- Lippo Malls Indonesia Retail Trust ($408M)
- United Hampshire REIT ($466M)
- Sabana REIT ($492M)
- EC World REIT ($502M)
- No change in Top 4 rankings compared to March to May updates.
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, here’s a subsidised 2-day course with all you need to know about REITs and how to start investing in them.
Top 20 Worst Performers of the Month in May 2022
SG 10 Year & US 10 Year Government Bond Yield
- SG 10 Year: 2.82% (increased from 2.52%)
- US 10 Year: 2.92% (increased from 2.87%)
Major REIT News in May 2022
S-REITs Earnings Season for the Period Ending 31 Mar 2022 has wrapped up
A total of 39 S-REITs have released their earnings/business updates for the Period Ending 31 Mar 2022 (28 Feb 2022 for SPH Reit).
MCT, MNACT shareholders approved merger
THE BUSINESS TIMES: Unit holders of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) have voted in favour of a merger to create one of Asia’s 10 largest real estate investment trusts (Reits).
The merged entity, to be named Mapletree Pan Asia Commercial Trust (MPACT), will have a theoretical market capitalisation of approximately $10.5 billion – ranking it among the top three Reits listed in Singapore, behind CapitaLand Integrated Commercial Trust and Ascendas Reit.
At separate extraordinary general meetings (EGMs) on Monday (May 23), all resolutions to pave the way for the merger were duly passed. At MCT’s EGM in the morning, some 91.7 per cent of MCT unit. Read More
ESR-LOGOS REIT starts trading
ESR-Logos Reit : J91U +1.22% ended its first day of trading on Thursday (May 5) on the Singapore Exchange at S$0.395, unchanged from its opening price.
The units were trading 1.3 per cent or S$0.005 higher than the last closing price of the counter, when it was previously known as ESR-Reit, with 476,000 units changing hands at the open. ESR-Reit had closed flat on Wednesday at S$0.39, on an ex-distribution basis.
On Thursday, the counter hit an intra-day high of S$0.40 at 9.09am, before easing to trade at an intra-day low of S$0.39 at 2.39pm. It ended the day at S$0.395, down S$0.005 or 1.3 per cent, with some 8.7 million units changing hands.
E-Log Reit was formed after a merger between ESR-Reit and Ara Logos Logistics Trust (ALog Trust), following the merger between the 2 Reits’ sponsors – ESR Cayman and ARA Asset Management. Read More
Fundamentally, the whole Singapore REITs landscape is undervalued based on the average Price/NAV value of the S-REITs. Below is the market cap heat map for the past 1 month. Generally, S-REITs in the past month have decreased in market cap.
Only 6 REITs increased in Market Cap the past month. They are ESR-LOGOS REIT (6.41%), Lendlease REIT (5.11%), ParkwayLife REIT (3.77%), Sabana REIT (1.11%), Keppel DC REIT (0.99%) and Mapletree NAC Trust (0.83%). Both ESR-LOGOS REIT and Mapletree NAC Trust’s growth can be attributed to their respective mergers, the enlarged ESR-LOGOS REIT started trading on 5th May, and for MNACT, the merger with MCT has been approved by shareholders.
Yield spread (in reference to the 10 year Singapore government bond of 2.82% as of 3rd June 2022) loosened slightly from 3.44% to 3.47%. The S-REIT Average Yield increased from 6.00% to 6.30%, but the increase in the Government Bond Yields offsets this Average S-REIT Yield increase. The yield of the REITs sector needs to increase to maintain the average yield spread of 4%. Amid all the negative news, S-REITs have been resilient and have one of the highest risk-adjusted dividend yields compared to other stock exchanges.
The risk premium has dropped, but still remains attractive (compared to other asset classes) to accumulate Singapore REITs in stages to lock in the current price and to benefit from long-term yield after the recovery, especially since the S-REIT Market is still at a fair value. Moving forward, it is expected that DPU will continue to increase due to the recovery of the global economy, as seen in the previous few earning updates, especially for Hospitality REITs. NAV is expected to be adjusted upward due to revaluation of the portfolio.
You may follow my coming REITs webinar and market updates:
- June 10 (10am): MoneyFM89.3
- June 13 (7pm): How to build your REIT portfolio into your retirement plan
- June 25 (10am): S-REIT Market Update & 4 Pains of REITs investing at Phillip Securities
MoneyFM 89.3 Interview
June 10th 2022, 10am
Listen as I speak with Michelle Martin and discuss about the REIT space in Singapore, and the REIT Market Outlook. Simply tune in at 10am.
*For New Investors / those looking to invest in REITs*
Free Webinar: How to build your REIT portfolio into your retirement plan
June 13th 2022, 7pm
Participants will have insight on the characteristics of REITs as an Asset Class, and able to explore the benefits and suitability of REITs in building their retirement portfolio.
Participants will appreciate the important factors to consider when building their retirement portfolio to minimise their investment risks.
Participants will be guided to construct a diversified portfolio to attain their retirement objective.
*For Current Investors of REITs / those looking to learn more*
Physical Seminar: S-REIT Market Update & 4 Pains of REITs investing @ Phillip Securities
June 25th 2022, 10am
Singapore REITs enjoyed a good first half of 2022. Can it continue?
US Fed will continue tightening monetary policy and is likely to raise interest rates by 0.5 percentage points in at least two more FOMC meetings. Will this be good or bad for REITs?
What should you do if you’re holding REITs or looking to buy now?
What are the ‘4 pains’ every REITs investor suffers from and how can you overcome them?
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 my extensive research and years of Singapore REIT investing experience can approach me separately for a REIT Portfolio Consultation.
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