- FTSE ST REIT Index up 823.64 to 837.43 (+1.67%) on the month update.
- REIT Index has rebounded c43% as of July 12 from the bottom on Mar 23, 2020.
- Yield spread (reference to 10-year Singapore government bond of 0.896%) has tightened from 5.47% to 4.414% due to cut in dividend yield.
- The risk premium is 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 until the breakout either break above the 200D SMA or break below the 50D SMA.
Technical Analysis
Currently the REIT index is currently trading on sideway consolidation, sandwiched between 200D SMA and 50D SMA. Immediate support at about 825 (Gap support) followed by 50D SMA. Immediate resistance at 200D SMA.
Short term direction: Sideway.
Most Overvalued REITs
- Keppel DC REIT (Price/NAV = 2.30)
- Mapletree Industrial Trust (Price/NAV = 1.83)
- Parkway Life (Price/NAV = 1.73)
- Mapletree Logistic Trust (Price/NAV = 1.67)
- Ascendas REIT (Price/NAV = 1.51).
Most Undervalued REITs
- Eagle Hospitality Trust* (Price/NAV =0.15)
- ARA Hospitality Trust (Price/NAV = 0.45)
- Lippo Malls Indonesia Retail Trust (Price/NAV = 0.49)
- Starhill Global (Price/NAV = 0.60)
- Far East HT (Price/NAV = 0.61)
[*Eagle Hospitality Trust is currently suspended]
The Highest Distribution Yield (TTM)
- Lippo Malls Indonesia Retail Trust (8.70%)
- First REIT (8.50%)
- Lendlease REIT (7.85%)
- ARA Hospitality Trust (7.31%)
- Cromwell European REIT (7.00%)
[ 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
- Lippo Malls Trust (42.1%)
- ESR REIT (41.7%)
- ARA Hospitality Trust (41.0%)
- ARA Logos Log Trust (40.8%)
- OUE Commercial REIT (40.2%)
Top 5 REITs with biggest market capitalisation
- Ascendas REIT ($11.8B)
- Mapletree Logistics Trust ($7.7B)
- CapitaMall Trust ($7.4B)
- Capitaland Commercial Trust ($6.8B)
- Mapletree Commercial Trust ($6.5B)
The bottom 3 REITs with smallest market capitalisation
- Eagle Hospitality Trust ($119M)
- ARA Hospitality Trust ($221M)
- Elite Commercial REIT ($228M)
[*Eagle Hospitality Trust is currently suspended]
Fundamental Analysis of 40 Singapore REITs
The chart below is the compilation of 41 REITs in Singapore with colour coding for the Distribution Yield, Gearing Ratio and Price to NAV Ratio. This gives investors a quick glance of which REITs are attractive enough to have an in-depth analysis. [ DPU Yield for Elite Commercial REIT, United Hampshire REIT are projections based on the IPO prospectus.]
• Note 1: The Financial Ratio are based on past data and there are lagging indicators.
• Note 2: This REIT table takes into account the dividend cuts due to COVID-19 outbreak. Yield is calculated trailing twelve months (TTM), therefore REITs with delayed pay-outs might have lower displayed yields.
• Noted 3: Distribution Yield, NAV, Gearing Ratio would probably be adjusted moving forward.
• Note 4: Some REITs opted for semi-annual reporting.
• Note 5: Monetary Authority of Singapore (MAS) has raised the Gearing Limit from 45% to 50% on April 16, 2020. The implementation of Interest Coverage Ratio (ICR) > 2.5x has been deferred to Jan 1, 2022.
• Price/NAV increased from 0.92 to 0.93 (Singapore Overall REIT sector is very undervalued now).
• Distribution Yield decreased from 6.45% to 5.31$ (take note that this is lagging number). About 17% of Singapore REITs (7 out of 41) have Distribution Yield > 7%. Do note that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
• Gearing Ratio maintains at 36.47%. 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.
