This article is published 1 week later, to allow for all REIT earnings to be completed. All values are now updated to the latest Q3 2022 earnings / business updates.
Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 737.01 to 731.39 (-0.76%) compared to last month’s update. From October 7th to October 21st, S-REITs sold off and reaching a low of 661. The last time the REIT Index hit 661 is on April 2nd, 2020, 13 days after the March 2020 crash. However, the REIT Index rebounded strongly back to 731 on Friday, November 11th with a gap up. This is a strong reversal candlestick pattern if the FTSE ST REIT Index does not close the gap and stays above this level in the next few trading sessions.
- Short-term direction: Up (Price Action – Gap up)
- Medium-term direction: Down (50D SMA is sloping down)
- Long-term direction Down (200D SMA is sloping down)
- Immediate Support at 718.4 (Gap Resistance)
- Immediate Resistance at 772
Chart with longer timeframe (~3 years)
Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on Oct 2nd, 2022.
Fundamental Analysis of 38 Singapore REITs
The following is the compilation of 38 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 highlighted are now updated with the latest Q3 2022 business updates/earnings.
- Ascott Residence Trust has been renamed to Capitaland Ascott Trust. Ascendas REIT has been renamed to Capitaland Ascendas 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 November 11th 2022.
- Digital Core REIT and Daiwa House Logistics Trust: Yield calculated from trailing six months distribution, TTM yield is annualised.
- Gearing (%): Leverage Ratio.
- Price/NAV: Price to Book Value. Formula: Current Price 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 0.81.
- Decreased from 0.83 from October 2022.
- This is due to the recent sell-off.
- 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 = 1.75)
- Keppel DC REIT (Price/NAV = 1.34)
- Mapletree Industrial Trust (Price/NAV = 1.19)
- Capitaland Ascendas REIT (Price/NAV = 1.15)
- Mapletree Logistics Trust (Price/NAV = 1.10)
- Mapletree PAC Trust (Price/NAV = 0.98)
- Only 5 REITs are overvalued now based on Price/NAV value.
- Most undervalued REITs (based on Price/NAV)
- Lippo Malls Indonesia Retail Trust (Price/NAV=0.36)
- ARA Hospitality Trust (Price/NAV = 0.52)
- Manulife US REIT (Price/NAV = 0.54)
- BHG Retail REIT (Price/NAV = 0.57)
- EC World REIT (Price/NAV = 0.57)
- OUE Commercial REIT (Price/NAV = 0.60)
Distribution Yields Overview
- TTM Distribution Yield Increased to 7.58%.
- Increased from 7.30% in October 2022.
- 18 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. The recent sell-off contributed to the increase in average yield.
- 9 REITs have a ttm yield of over 10%!
- Highest Distribution Yield REITs (ttm)
- Manulife US REIT (13.97%)
- Prime US REIT (13.53%)
- EC World REIT (12.46%)
- United Hampshire US REIT (11.92%)
- Lippo Malls Indonesia Retail Trust (11.61%)
- Keppel Pacific Oak US REIT (10.88%)
- 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 widened to 4.17%.
- Increased from 3.76% in October 2022.
Gearing Ratios Overview
- Gearing Ratio increased to 37.03%.
- Increased from 36.68% in October 2022.
- Gearing Ratios are updated quarterly.
- Highest Gearing Ratio REITs
- Lippo Malls Indonesia Retail Trust (43.7%)
- ARA Hospitality Trust (43.3%)
- Suntec REIT (43.1%)
- Manulife US REIT (42.5%)
- United Hampshire US REIT (42.1%)
- Elite Commercial REIT (41.9%)
Market Capitalisation Overview
- Total Singapore REIT Market Capitalisation decreased by 0.3% to S$96.23 Billion.
- Decreased from S$96.52 Billion in October 2022.
- Biggest Market Capitalisation REITs:
- Capitaland Integrated Commercial Trust ($3.52B)
- Ascendas REIT ($11.59B)
- Mapletree Pan Asia Commercial Trust ($8.64B)
- Mapletree Logistics Trust ($7.73B)
- Mapletree Industrial Trust ($6.22B)
- Frasers Logistics & Commercial Trust ($4.36B)
- No change in the rankings since September 2022.
- Smallest Market Capitalisation REITs:
- Lippo Malls Indonesia Retail Trust ($239M)
- BHG Retail REIT ($257M)
- ARA Hospitality Trust ($289M)
- EC World REIT ($368M)
- United Hampshire US REIT ($384M)
- Elite Commercial REIT ($392M)
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 October 2022
SG 10 Year & US 10 Year Government Bond Yield
- SG 10 Year: 3.48% (decreased from 3.49%)
- US 10 Year: 3.82% (decreased from 3.84%)
Major REIT News in October 2022
S-REITs Earnings Season for the Period Ending 30 Sep 2022 has wrapped up
All S-REITs have finished reporting their earnings. Of the 16 REITs who reported their earnings for Q1 and/or Q2 (taking most recent DPU) (excl. DC REIT), the overview on Q-o-Q or H-o-H DPU change are as follows:
4 REITs have reported an increase in DPU,
3 REITs have reported no change in DPU, and
9 REITs have reported a decrease in DPU.
Fundamentally, the whole Singapore REITs landscape is very undervalued based on the average Price/NAV (at 0.81) value of the S-REITs, which is quite rare that S-REIT is trading at such huge discount with a very attractive DPU yield of 7.58%! This is even higher than as of last month. Below is the market cap heat map for the past 1 month. The performance of REITs are evenly split. 18 REITs have been bullish while 17 REITs have been bearish the last 30 days. There is no clear correlation with market cap in terms of performance.
Yield spread (in reference to the 10-year Singapore government bond yield of 3.48% as of 11th November 2022) widened from 3.76% to 4.17%. This is a huge increase of 0.41%. The S-REIT Average Yield increased from 7.30% to 7.58%. Government Bond Yields remained relatively unchanged. This resulted in the widening of the yield spread.
Technically, FTSE ST REIT Index is currently in a bearish territory but rebounded strongly from the support level. Based on the past chart patterns, REIT Index used to have a strong V-shaped rebound when there was a huge sell off with a very attractive valuation & DPU yield. Will the history repeat itself and can the S-REIT Index stage a strong rebound from this level? It remains to be seen. However, the Reward/Risk Ratio look quite attractive both fundamentally and technically. Investors can start to do some bottom fishing on the fundamentally strong REITs by locking in the current share price and high DPU yield.
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