Technical Analysis of FTSE ST REIT Index (FSTAS351020)
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 792.62 to 737.01 (-7.02%) compared to last month’s update. A huge sell-off occurred after the supports were broken and sent the REIT index towards the 2 years low on September 30th at 718. The previous time the REIT Index was at 718 was back in April 2020. A slight rebound to 737 then occurred and a down trend channel has formed.
- Short-term direction: Down (MA) but may rebound (based on candlestick pattern)
- Medium-term direction: Down
- Long-term direction: Down
- Immediate Support at 720
- Immediate Resistance at 800
Normal Timeframe chart (~2 years)
For the past 2 selloffs, it has been followed by a V-Shaped recovery.
Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on Sept 3rd, 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 are now updated with the latest Q2 2022 business updates/earnings.
- Since MPACT started trading, values shown below (except price and market cap) are of MCT.
- 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 September 30th, 2022
- Digital Core REIT: Yield calculated from IPO Prospectus.
- Daiwa House Logistics Trust: Yield calculated from trailing six months distribution.
- Gearing (%): Leverage Ratio.
- Price/NAV: Price to Book Value. Formula: Current Price (as of September 30th, 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 0.83.
- Decreased from 0.91 from September 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 = 1.76)
- Mapletree Industrial Trust (Price/NAV = 1.27)
- Keppel DC REIT (Price/NAV = 1.24)
- Ascendas REIT (Price/NAV = 1.13)
- Mapletree Logistics Trust (Price/NAV = 1.06)
- Mapletree PAC Trust (Price/NAV = 0.99)
- 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=0.41)
- ARA Hospitality Trust (Price/NAV = 0.53)
- EC World REIT (Price/NAV = 0.60)
- OUE Commercial REIT (Price/NAV = 0.60)
- IREIT Global (Price/NAV = 0.60)
- Manulife US REIT (Price/NAV = 0.61)
Distribution Yields Overview
- TTM Distribution Yield Increased to 7.30%.
- Increased from 6.58% in September 2022.
- 18 of 40 Singapore REITs have distribution yields of above 7%. (3 more than 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.
- 8 REITs have a ttm yield of over 10%!
- Highest Distribution Yield REITs (ttm)
- Prime US REIT (12.91%)
- Manulife US REIT (12.33%)
- EC World REIT (11.94%)
- Elite Commercial REIT (11.40%)
- Keppel Pacific Oak US REIT (11.27%)
- United Hampshire US REIT (11.14%)
- 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 3.76%.
- Increased from 3.50% in September 2022.
Gearing Ratios Overview
- Gearing Ratio remained at 36.68%.
- Remained at 36.68% in September 2022.
- Gearing Ratios are updated quarterly. No REITs have released business updates / earnings in the past month, therefore there is no change.
- Highest Gearing Ratio REITs
- Lippo Malls Indonesia Retail Trust (43.9%)
- ARA Hospitality Trust (43.5%)
- Suntec REIT (43.1%)
- Manulife US REIT (42.4%)
- Elite Commercial REIT (41.9%)
- ESR-LOGOS REIT (40.6%)
Market Capitalisation Overview
- Total Singapore REIT Market Capitalisation decreased by 6.75% to S$96.52 Billion.
- Decreased from S$103.51 Billion in September 2022.
- S-REIT Market Cap has fallen below S$100 Billion.
- Biggest Market Capitalisation REITs:
- Capitaland Integrated Commercial Trust ($12.73B)
- Ascendas REIT ($11.30B)
- Mapletree Pan Asia Commercial Trust ($9.00B)
- Mapletree Logistics Trust ($7.47B)
- Mapletree Industrial Trust ($6.40B)
- Frasers Logistics & Commercial Trust ($4.55B)
- No change compared to last month’s update.
- Smallest Market Capitalisation REITs:
- Lippo Malls Indonesia Retail Trust ($277M)
- BHG Retail REIT ($277M)
- ARA Hospitality Trust ($310M)
- Elite Commercial REIT ($05M)
- EC World REIT ($460M)
- United Hampshire REIT ($429M)
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 September 2022
SG 10 Year & US 10 Year Government Bond Yield
- SG 10 Year: 3.49% (decreased from 3.07%)
- US 10 Year: 3.84% (decreased from 3.19%)
Major REIT News in September 2022
Ascendas REIT, Ascott Residence Trust, Ascendas India revise names
SINGAPORE BUSINESS REVIEW: The names of property firms, Ascendas Real Estate Investment Trust (Reit), Ascott Residence Trust (ART), and Ascendas India Trust, were modified as well as their managers.
According to a company announcement, Ascendas REIT was changed to CapitaLand Ascendas REIT (CLAR), ART was renamed to CapitaLand Ascott Trust (CLAS), and Ascendas India Trust’s name was revised to CapitaLand India Trust (CLINT).
In addition to this, CLAR’s manager is CapitaLand Ascendas REIT Management Limited, CLAR’s Reit manager is CapitaLand Ascott Trust Management Limited whilst its business trust trustee-manager is CapitaLand Ascott Business Trust Management Pte. Ltd., and CLINT’s manager is CapitaLand India Trust Management Pte. Ltd.
The revisions took effect on 27 September 2022. Read article here
Fundamentally, the whole Singapore REITs landscape is very undervalued based on the average Price/NAV (at 0.83) 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 7.3%! Below is the market cap heat map for the past 1 month. Generally, S-REITs in the past month have decreased in market cap. August and September has been a bearish month for S-REITs. The sole bullish REIT for this month is BHG Retail Reit (+3.85%).
Yield spread (in reference to the 10 year Singapore government bond yield of 3.49% as of 30th September 2022) widened from 3.50% to 3.76%. The S-REIT Average Yield increased from 6.58% to 7.30%, while the Average S-REIT Yield increase due to the sell-off more than offsets the increase in Government Bond Yield. This resulted in the widening of the yield spread.
Despite the bearish month of September, S-REITs have been resilient (compared to other asset classes) and have one of the highest risk-adjusted dividend yields compared to other stock exchanges.
Technically, FTSE ST REIT Index is currently in a bearish territory and rebounded from the support level. Based on the past chart patterns, REIT Index used to have a strong V-shaped rebound and surpass the previous high after the huge sell off. 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.
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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