FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 826.65 to 859.68 (+3.99%) compared with last month’s update. Currently the Singapore REIT index is still trading with a range between 816 and 874.

• Yield spread (reference to ten-year Singapore government bond of 1.391%) continues to tighten from 4.289% to 4.08%. However, the risk premiums are still attractive to accumulate Singapore REITs in stages to lock in the current price and long-term yield after the recovery. Moving forward, an increase in DPU is expected due to the global economic recovery.
• Technically the REIT Index is currently trading in a sideways consolidation after the false breakout. However, current macro factors such as low interest-rate environment, aggressive M&A for future DPU growth and recovery of the global economy support the bullish breakout.

Technical analysis 

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 826.65 to 859.68 (+3.99%) compared with last month’s update. Currently the Singapore REIT index is still trading with a range between 816 and 874.

• For now, the short-term direction is sideways.
• Immediate support at 816, followed by 775.
• Immediate resistance at 874.

• Most overvalued REITs (based on price/NAV)
  • Keppel DC REIT (price/NAV = 2.29)
  • Parkway Life REIT (price/NAV  = 2.08)
  • Mapletree Industrial Trust (price/NAV  = 1.61)
  • Mapletree Logistics Trust (price/NAV  = 1.52)
  • Ascendas REIT (price/NAV  = 1.38)

No change from January to March 2021 for top five overvalued REITs ranking.

• Most undervalued REITs (based on price/NAV)
  • Lippo Malls Indonesia Retail Trust (price/NAV  = 0.39)
  • First REIT (price/NAV  = 0.47)
  • BHG REIT (price/NAV  = 0.64)
  • OUE Commercial REIT (price/NAV  = 0.66)
  • Starhill Global REIT (price/NAV  = 0.70)
  • Sabana REIT (price/NAV  =0.77)
  • Suntec REIT (price/NAV  = 0.77)

• Highest distribution yield REITs (TTM)
  • First REIT (17.66%)
  • KepPacOak US REIT (8.65%)
  • Prime US REIT (8.31%)
  • IREIT Global (7.80%)
  • Manulife REIT (7.67%)
  • Cromwell European REIT (7.57%)

Remember 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.

• Highest gearing ratio REITs
  • Eagle Hospitality Trust (65.5%) – filed for Chapter 11 bankruptcy protection
  • First REIT (49%)
  • ARA Hospitality Trust (48.2%)
  • Suntec REIT (44.3%)
  • Lippo Malls Retail Trust (42.4%)
  • ESR REIT (41.6%)
  • Mapletree NAC Trust (41.3%)
  • OUE Commercial REIT (41.2%)

• Total Singapore REIT market capitalisation = S$107.9bn
  • Increased from S$104.9bn in January 2021

• Biggest market capitalisation REITs
  • Capitaland Integrated Commercial Trust ($14.18bn)
  • Ascendas REIT ($12.30bn)
  • Mapletree Logistics Trust ($8.31bn)
  • Mapletree Commercial Trust ($7.06bn)
  • Mapletree Industrial Trust ($6.42bn)

No change in ranking compared with March 2021 update.

• Smallest market capitalisation REITs
  • BHG Retail REIT ($281m)
  • United Hamsphire REIT ($327m)
  • First REIT ($376m)
  • ARA Hospitality Trust ($397m)
  • Sabana REIT ($415m)

No change in ranking compared with March 2021 update.

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 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: REITs highlighted in blue have been updated with the latest the Q1 2021 business updates.

• Price/NAV  remained at 1.01
  • Was 1.01 in March 2021.
  • Singapore overall REIT sector is at about fair value now.
  • Take note that NAV is adjusted downwards for most REITs due to drop in rental income (property valuation is done using DCF model or comparative model).

• TTM distribution yield decreased to 5.47%
  • Decreased from 5.68% in March 2021.
  • 31% of Singapore REITs (12 out of 39) have distribution yields above 7%.
  • 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 post circuit-breaker recovery.
  • Excluded Eagle Hospitality Trust due to suspension.

• Gearing ratio at 37.44% 
  • Remained at 37.44% in March 2021.
  • Gearing ratios are updated quarterly.
  • In general, Singapore REITs sector gearing ratio is healthy but started to increase due to the reduction of the valuation of portfolios and increase in borrowing due to covid-19.