- FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased slightly from 822.03 to 828.26 (+0.76%) on the monthly update. Currently the REIT index is currently back in trading on sideways consolidation, after recovered from a sudden sell-off in the last few weeks.
- Yield spread (reference to ten-year Singapore government bond of 0.925%) tightened from 5.82%. to 4.575% due to drop in TTM DPU.
- 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 still trading on sideways consolidation with low volatility until the breakout. Current macro factors such as low interest rate environment and recovery of global economic support the bullish breakout.
Technical analysis
FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased slightly from 822.03 to 828.26 (+0.76%) compared with the last monthly update. Currently the REIT index is back in trading on sideways consolidation, after recovering from a sudden sell-off in the last few weeks.
- For now, the short-term direction is sideways, until breakout of the resistance (starting an up-trend) or breakdown of the support (starting a down trend).
- Immediate support at 819.
- Immediate resistance at 852, followed by 874.
Most overvalued REITs
- Keppel DC REIT (price/NAV = 2.49)
- Parkway Life REIT (price/NAV = 2.02)
- Mapletree Industrial Trust (price/NAV = 1.78)
- Mapletree Logistic Trust (price/NAV = 1.64)
- Ascendas REIT (price/NAV = 1.41).
Most undervalued REITs
- Eagle Hospitality Trust* (price/NAV =0.17)
- Lippo Malls Indonesia Retail Trust (price/NAV = 0.30)
- ARA Hospitality Trust (price/NAV = 0.49)
- First REIT (price/NAV = 0.45)
- Starhill Global REIT (price/NAV = 0.58)
(*Eagle Hospitality Trust is currently suspended)
Highest distribution yield (TTM)
- First REIT (12.55%)
- Lippo Malls Indonesia Retail Trust (9.88%)
- Keppel Pacific Oak US REIT (8.81%)
- ARA Hospitality Trust (8.53%)
- Cromwell REIT (7.77%)
(Reminder: 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.)
Highest gearing ratio REITs
- Eagle Hospitality Trust (65.5%)
- ARA Hospitality Trust (43%)
- Lippo Malls Indonesia Retail Trust (42.5%)
- ESR REIT (41.6%)
- Suntec REIT (41.5%)
(Singapore REIT has a gearing limit of 50%.)
Top five REITs with biggest market capitalisation
- Capitaland Integrated Commercial Trust (S$12.81B)
- Ascendas REIT (S$11.26B)
- Mapletree Logistics Trust (S$8.14B)
- Mapletree Industrial Trust ($7.08B)
- Mapletree Commercial Trust ($6.73B)
Bottom five REITs with smallest market capitalisation
- Eagle Hospitality Trust (S$119M)
- ARA Hospitality Trust ($278M)
- BHG REIT (S$281M)
- United Hamsphire REIT ($286M)
- Elite Commercial REIT ($392M)
(*Eagle Hospitality Trust is currently suspended)
Fundamental analysis of 40 Singapore REITs
The chart below is the compilation of 40 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. (Source is here.)
Note 1: The financial ratios are based on past data and there are lagging indicators.
Note 2: This REIT table takes into account the dividend cuts due to the covid-19 outbreak. Yield is calculated trailing 12 months (TTM), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower.
Note 3: All REITs in Singapore have already released the Q3 earnings or provided a latest business update.
Note 4: Capital Mall Trust has merged with Capitaland Commercial Trust and has became Capitaland Integrated Commercial Trust (C38U). Capitaland Commercial Trust is delisted.
- Price/NAV increased from 0.92 to 0.95 (Singapore overall REIT sector is very undervalued now).
- TTM distribution yield further decreased from 6.82% to 5.50% (after Q3 earning release after factoring in the dividend cut impact caused by covid-19). About 27.5% of Singapore REITs (11 out of 40) have distribution yield > 7%. Do note that these yield numbers are based on current prices taking into account the delayed distribution/dividend cuts due to covid-19.
- Gearing ratio increases from 36.68% to 37.63%. In general, the Singapore REITs sector gearing ratio is healthy but started to increase in response to the reduction of the valuation of the portfolio and increase in borrowing.
