Singapore REITs Monthly Update (May 4th, 2024) – My Stocks Investing

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 666.29 to 632.65 (5.04%) compared to last month’s update. The REIT index is now trading in a downward parallel channel, breaking the 20D SMA support again (now turned resistance). The new support is now the bottom line of the parallel channel, followed by the 591 support (low during the March 2020 crash).

• Short-term direction: Down
• Medium-term direction: Down
• Long-term direction: Down
• Immediate Support at 591
• Immediate Resistance at 20D SMA, 50D SMA

FTSE REIT Index Chart (1.5 years)

FTSE REIT Index Chart (5 years)

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on April 7th, 2024.

The following is the compilation of 38 Singapore REITs with colour-coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

• The Financial Ratios are based on past data and these are lagging indicators.
• REITs with yellow highlights have the latest Q1 2024 values, other REITs have Q4 2023 update values.
• I have introduced weighted average (weighted by market cap) to the financial ratios, in addition to the existing simple average ratios. This is another perspective where smaller market cap REITs do not disproportionately affect the average ratios.

Data from REITsavvy Screener. https://screener.reitsavvy.com/

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 is Red.

• Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of May 3rd, 2024.

• Gearing (%): Leverage Ratio.

• Price/NAV: Price to Book Value. Formula: Current Price over Net Asset Value per Unit.

• Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs are referenced to SG Gov Bond Yield.

As of May 2024, all REITs’ Yield Spread will be referenced to SG Gov Bond Yields, regardless of trading currency.

Price/NAV Ratios Overview

• Price/NAV decreased to 0.78 (Weighted Average: 0.78)
  • Decreased from 0.80 in April 2024.
  • Singapore Overall REIT sector is undervalued now.
  • Price/NAV increased due to NAV trending downwards from the latest Q4 2023 update.

• Most overvalued REITs (based on Price/NAV)

  • EC World REIT	2.33
    ParkwayLife REIT	1.52
    Keppel DC REIT	1.25
    Mapletree Industrial Tr	1.24
    Capitaland Ascendas REIT	1.16
    Mapletree Logistics Tr	0.98

  • Only 5 REITs are overvalued now based on Price/NAV value.
  • EC World REIT has its NAV/Unit dropped from 0.75 to 0.12 as of their latest update. This caused its Price/NAV to skyrocket to 2.33. Also it is currently suspended.

• Most undervalued REITs (based on Price/NAV)

  • Prime US REIT	0.19
    Lippo Malls Indonesia Retail Trust	0.19
    Keppel Pacific Oak US REIT	0.20
    Manulife US REIT	0.21
    ARA Hospitality Trust	0.39
    OUE REIT	0.44

Distribution Yields Overview

• TTM Distribution Yield increased to 8.07%. (Weighted Average increased to 6.63%)    
  • Increased from 7.75% in April 2024. (Weighted Average was 6.32%)
  • 21 of 40 Singapore REITs have ttm 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 economic recovery.
  • 10 REITs have a ttm yield of over 10%!

• Highest Distribution Yield REITs (ttm)

  • Prime US REIT	24.20
    Keppel Pacific Oak US REIT	17.99
    Daiwa House Logistics Trust	13.62
    Elite Commercial REIT	13.13
    ARA Hospitality Trust	12.25
    United Hampshire REIT	11.27

  • Reminder that these yield numbers are based on current prices. 
  • 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 widened to 4.68%. (Weighted Average remained almost the same at 3.93%)     
  • Widened from 4.38% in April 2024. (Weighted Average was 3.90%)
  • From May 2024 onwards, all my yield spread measurements are now in relation to SG Gov Bond Yields, no longer a mix with US Gov Bond Yields.

Gearing Ratios Overview

• Gearing Ratio increased to 39.12%. (Weighted Average: 38.13%)
  • Increased from 38.76% in April 2024. (Weighted Average: 37.90%)  
  • Gearing Ratios are updated quarterly.
  • S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.

• Highest Gearing Ratio REITs

  • Manulife US REIT	58.3
    EC World REIT	58.3
    Prime US REIT	48.4
    ARA Hospitality Trust	44.1
    Lippo Malls Indonesia Retail Trust	43.7
    Keppel Pacific Oak US REIT	43.0

  • MUST and EC World REIT’s gearing ratio has exceeded MAS’s gearing limit of 50%. However the aggregate leverage limit is not considered to be breached if exceeding the limit is due to circumstances beyond the control of the REIT Manager.

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation decreased by 4.91% to S$84.84 Billion.
  • Decreased from S$89.22 Billion in April 2024.

• Biggest Market Capitalisation REITs (S$):

  • Capitaland Integrated Commercial Trust	12834.50
    Capitaland Ascendas REIT	11125.20
    Mapletree Logistics Tr	6741.90
    Mapletree Pan Asia Commercial Trust	6408.66
    Mapletree Industrial Tr	6180.30
    Frasers Logistics & Commercial Trust	3740.00

  • There are no change in the rankings since November 2022.

• Smallest Market Capitalisation REITs (S$):

  • Lippo Malls Indonesia Retail Trust	92.35
    Elite Commercial REIT	115.91
    Manulife US REIT	126.96
    Prime US REIT	133.28
    Keppel Pacific Oak US REIT	144.56
    ARA Hospitality Trust	161.90

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. If you want to know more about investing in REITs, scroll down for more information on the REITs courses.

Source: https://screener.reitsavvy.com/

SG 10 Year Government Bond Yield

• SG 10 Year: 3.39% (increased from 3.22%)

The drop continues for S-REITs, approaching the low of 613 last reached in late 2023 (support). Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.78) value of the S-REITs, with still a very attractive DPU yield of 8.07%! (Weighted average yield of 6.67%). Do take note that NAV and DPU are lagging numbers.

Weighted Average Yield spread (in reference to the 10-year Singapore government bond yield of 3/39% as of May 3rd 2024) remained almost the same from 3.90% to 3.93%. Based on the CME group’s interest rate futures, there will still be a high possibility of rate cut of between 100-150 bps by end of 2024.

Kenny Loh is a Wealth Advisory Director and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement