Singapore REITs Monthly Update (September 8th, 2024) – My Stocks Investing

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 654.43 to 702.98 (7.15%) compared to last month’s update. This is the highest percentage gain in the index in a while. The REIT Index has started an uptrend and enter bullish territory.

• Short-term direction: Up
• Medium-term direction: Up
• Long-term direction: Sideways
• Immediate Support: 20D, 50D SMA and 200D SMA (665-675 zone)
• Immediate Resistance 732-740 Zone.

FTSE REIT Index Chart (2 years)

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on August 12th, 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.
• All REITs have the latest Q2 2024 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 September 6th, 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 increased to 0.89 (Weighted Average: 0.89)
  • Increased from 0.85 in August 2024.
  • Singapore Overall REIT sector is slightly undervalued

• Most overvalued REITs (based on Price/NAV)
  

  Keppel DC REIT	1.60
  ParkwayLife REIT	1.52
  Capitaland Ascendas REIT	1.33
  Mapletree Industrial Tr	1.21
  Frasers Centrepoint Trust	1.05
  Mapletree Logistics Tr	1.02

  • EC World REIT is currently suspended, however at current Price and NAV/Unit values it has a value of 4.67 (N.M)

• Most undervalued REITs (based on Price/NAV)
  

  Manulife US REIT	0.29
  Prime US REIT	0.33
  ARA Hospitality Trust	0.34
  Keppel Pacific Oak US REIT	0.35
  Lippo Malls Indonesia Retail Trust	0.36
  OUE REIT	0.43

Distribution Yields Overview

• TTM Distribution Yield decreased to 6.37%. (Weighted Average decreased to 5.91%)    
  • Decreased from 7.14% in August 2024. (Weighted Average was 6.36%)
  • 15 of 40 Singapore REITs have ttm distribution yields of above 7%.

• Yield Spread tightened to 3.76%. (Weighted Average remained similar at 3.99%)     
  • Tightened from 4.25% in August 2024. (Weighted Average was 4.01%)
  • 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 remained similar at 39.12%. (Weighted Average: 38.28%)
  • Remained similar from 39.14% in August 2024. (Weighted Average: 38.28%)  
  • Gearing Ratios are updated quarterly. Therefore there were only 2 gearing ratio updates this month.
  • S-REITs Gearing Ratio has been on a steady uptrend. It was 35.55% in Q4 2019.

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation increased by 7.12% to S$92.57 Billion.
  • Increased from S$86.20 Billion in August 2024.

• Biggest Market Capitalisation REITs (S$m):
  

  Capitaland Integrated Commercial Trust	14410.76
  Capitaland Ascendas REIT	12795.27
  Mapletree Pan Asia Commercial Trust	7412.37
  Mapletree Logistics Tr	7022.26
  Mapletree Industrial Tr	5981.85
  Frasers Logistics & Commercial Trust	4226.20

• Smallest Market Capitalisation REITs (S$m):
  

  ARA Hospitality Trust	136.30
  Lippo Malls Indonesia Retail Trust	153.94
  Elite Commercial REIT	161.43
  Manulife US REIT	183.50
  BHG Retail REIT	226.03
  EC World REIT	226.76

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: 2.59% (decreased from 2.88%)

Singapore REITs have experienced a strong rally over the past month in anticipation of an interest rate cut in September. The FTSE ST REIT index has recently begun an uptrend, signaling the start of a bull market for Singapore REITs.

The expected cut in the U.S. interest rate and the decline in the U.S. 10-year bond yield are key catalysts that could further boost the Singapore REIT sector. According to the current Fed Fund Rate projections from the CME Group, a minimum 25 basis point cut is expected by Q3, with a total reduction of at least 100 basis points by the end of 2024.

The S-REIT sector is currently trading at an 11% discount to its fair value, with an average trailing twelve-month (TTM) yield of 6.37%. Despite the recent rally, valuations and distribution per unit (DPU) yields remain attractive. Investors may consider locking in the current yield at a discounted valuation, while awaiting a potential valuation re-rating in response to the anticipated interest rate cut by the end of 2024.

US 10 Year Risk Free Rate

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