• FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased slightly from 859.68 to 865.91 (+0.72%) compared to last month’s update. Currently the Singapore REIT index is still trading with a range between 816 and 874.
• Yield spread (in reference to the 10-year Singapore government bond of 1.551%) continues to tighten from 4.08% to 3.809%. However, the risk premium is still attractive to accumulate Singapore REITs in stages to lock in the current price and to benefit from long-term yield after the recovery. Moving forward, it is expected that DPU will increase due to the recovery of the global economy.
• Technically the REIT Index is still trading in a sideways consolidation waiting for a breakout (upside bias). Current macro factors, such as a low-interest rate environment, aggressive M&A for future DPU growth and recovery of global economics support the bullish breakout.

Technical analysis 

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased slightly from 859.68 to 865.91 (+0.72%) compared to last month’s update. Currently the Singapore REIT index is still trading with a range between 816 and 874.

• As for now, short term direction: sideways.
• Immediate support at 816, followed by 775.
• Immediate resistance at 874.

Source: Market Watch

• Most overvalued REITs (based on price/NAV)
  • Keppel DC REIT (price/NAV = 2.28)
  • Parkway Life REIT (price/NAV = 2.14)
  • Mapletree Industrial Trust (price/NAV = 1.70)
  • Mapletree Logistics Trust (price/NAV = 1.53)
  • Ascendas REIT (price/NAV = 1.41)
  • No change from January-April 2021 for top five overvalued REITs ranking

• Most undervalued REITs (based on price/NAV)
  • First REIT (price/NAV = 0.52)
  • BHG REIT (price/NAV = 0.64)
  • OUE Commercial REIT (price/NAV = 0.69)
  • Starhill Global REIT (price/NAV = 0.69)
  • Lippo Malls Indonesia Retail Trust (price/NAV = 0.69)
  • Suntec REIT (price/NAV = 0.74)
  • All six REITs were also the top six undervalued REITs of April 2021

• Highest distribution yield REITs (ttm)
  • First REIT (15.96%)
  • Prime US REIT (8.02%)
  • IREIT Global (7.80%)
  • Manulife REIT (7.42%)
  • Cromwell European REIT (7.33%)
  • Soilbuild Business Space REIT (7.33%)
  • 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

• 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 (41.7%)
  • ESR REIT (41.6%)
  • Mapletree NAC Trust (41.3%)
  • OUE Commercial REIT (41.2%)

• Total Singapore REIT market capitalisation = S$108.8b
  • Increased from S$107.9 Billion in January 2021

• Biggest market capitalisation REITs
  • Capitaland Integrated Commercial Trust ($14.18B)
  • Ascendas REIT ($12.38B)
  • Mapletree Logistics Trust ($8.48B)
  • Mapletree Commercial Trust ($7.06B)
  • Mapletree Industrial Trust ($6.65B)
  • No change in ranking compared to March and April 2021 update

• Smallest market capitalisation REITs
  • BHG Retail REIT ($284M)
  • United Hampshire REIT ($327M)
  • First REIT ($392M)
  • ARA Hospitality Trust ($393M)
  • Sabana REIT ($442M)
  • No change in ranking compared to March and April 2021 update

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: https://stocks.cafe/kenny/advanced.) 

• Note 1: The Financial Ratio is 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 increased at 1.04
  • Was 1.01 in April 2021
  • Singapore Overall REIT sector is at about fair value now
  • Take note that NAV is adjusted downward for most REITs due to drop in rental income (property valuation is done using DCF model or comparative model).

• TTM distribution yield decreased to 5.36%
  • Decreased from 5.47% in April 2021
  • 23% of Singapore REITs (9 out of 39) have distribution yields of 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 37.53%. 
  • Remained almost the same at 37.44% in April 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