5th June 2022.

• 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.

• 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.

Technical analysis

• 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
  

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. ESR REIT and ARA LOGOS Logistics Trust has merged to form ESR-LOGOS REIT. ALOG REIT is no longer included.

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.

39 Singapore REITs at a glance: REIT table

• 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.

 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 isRed. 
  • 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.