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FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 748.41 to 734.05 (1.91%) compared to last month’s update. After failing to break above the previous support turn resistance zone of 790-800 on February 3rd 2023, the S-REIT Index is currently retracing back and trading between the 730-744 zone for the past few weeks.

• Short-term direction: Sideways (trading between 730-744 zone)

• Medium-term direction: Sideways (50D SMA is sideways)

• Long-term direction Down (200D SMA is sloping down)

• Immediate Support at 730, followed by 714.

• Immediate Resistance at 744, followed by 790-800 zone.

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on February 11th, 2023.

Fundamental Analysis of 38 Singapore REITs

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.

• This REIT table takes into account the dividend cuts due to the COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower for more affected REITs.

• All REITs are now highlighted in yellow-green. All are now updated with the latest Q4 2022 business updates/earnings.

• SPH Reit has been renamed to Paragon REIT since January 3rd, 2023.

Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced

Singapore REITs Table

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 March 3rd 2023.

  Notes:

• Mapletree Pan Asia Commercial Trust: Annualised yield. MPACT has recently reverted to quarterly distribution. Paragon REIT: Annualised yield. Calculated after converting from 13 months of distribution to 12 months.

• 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 trading in USD is referenced to US Gov Bond Yield, everything else is referenced to SG Gov Bond Yield.

Price/NAV Ratios Overview

• Price/NAV decreased to 0.84.      Decreased from 0.85 in February 2023.Singapore Overall REIT sector is undervalued now. Take note that NAV is adjusted upwards for some REITs due to pandemic recovery.

• Most overvalued REITs (based on Price/NAV)

• Parkway Life REIT (Price/NAV = 1.77)

• Keppel DC REIT (Price/NAV = 1.43)

• Mapletree Industrial Trust (Price/NAV = 1.24)

• Mapletree Logistics Trust (Price/NAV = 1.19)

• Capitaland Ascendas REIT (Price/NAV = 1.17)

• Paragon REIT (Price/NAV = 1.05) Only 7 REITs are overvalued now based on Price/NAV value. No change in the Top 6 compared to last month.

• Most undervalued REITs (based on Price/NAV)

• Lippo Malls Indonesia Retail Trust (Price/NAV=0.38)

• EC World REIT (Price/NAV = 0.48)

• ARA US Hospitality Trust (Price/NAV = 0.49)

• Manulife US REIT (Price/NAV = 0.50)

• Prime US REIT (Price/NAV = 0.51)

• Keppel Pacific Oak US REIT (Price/NAV = 0.56)

Distribution Yields Overview

• TTM Distribution Yield increased to 7.70%.        

• Increased from 7.33% in February 2023.

• 17 of 40 Singapore REITs 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 economic recovery.

• 9 REITs have a ttm yield of over 10%!

• Highest Distribution Yield REITs (ttm)

• Manulife US REIT (17.27%)

• Prime US REIT (17.01%)

• EC World REIT (13.23%)

• Keppel Pacific Oak US REIT (12.75%)

• United Hampshire REIT (12.00%)

• Lippo Malls Indonesia Retail REIT (11.92%)

• 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.A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.

• Yield Spread widen slightly to 4.21%.    Widened from 4.12% in February 2023.

Gearing Ratios Overview

• Gearing Ratio increased slightly to 37.54%.     

• Increased from 37.38% from February 2023.

• 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 (48.8%)

• Elite Commercial Trust (45.8%)

• Lippo Malls Indonesia Retail Trust (44.6%)

• Suntec REIT (42.4%)

• Prime US REIT (42.1%)

• United Hampshire US REIT (41.8%)

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation decreased by 1.94% to S$96.84 Billion.

• Decreased from S$98.76 Billion in February 2023.

• Biggest Market Capitalisation REITs:

• Capitaland Integrated Commercial Trust ($12.53B)

• Capitaland Ascendas REIT ($11.68B)

• Mapletree Pan Asia Commercial Trust ($9.01B)

• Mapletree Logistics Trust ($8.08B)

• Mapletree Industrial Trust ($6.40B)

• F

  rasers Logistics & Commercial Trust ($4.64B)

• No change in the rankings since September 2022.

• Smallest Market Capitalisation REITs:

• Lippo Malls Indonesia Retail Trust ($200M)

• BHG Retail Trust ($249M)EC World REIT ($292M)

• ARA Hospitality Trust ($303M)

• Elite Commercial REIT ($361M)

• United Hampshire REIT ($369M)

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, here’s a subsidised 2-day course with all you need to know about REITs and how to start investing in them.

Major REIT News in January 2023

S-REITs earnings/results for Q4 2022 have wrapped up

All S-REITs have reported their earnings for Q4 2022. 22 out of 38 REITs (about 58%) reported YoY growth in DPU.

S-REIT Summary Charts

Below are 3 S-REIT Summary Charts. These show the current state of the S-REIT market.

Yield vs Price/NAV Chart. Size of bubbles represent market cap.

Gearing vs ICR Chart. Size of bubbles represent market cap.

Price/NAV Chart, with comparison between sectors.

Summary

Fundamentally, the whole Singapore REITs landscape remains undervalued based on the average Price/NAV (at 0.84) value of the S-REITs, with a very attractive DPU yield of 7.70%! The valuation and DPU yield are back to attractive level due to the correction in February probably caused by the increase of 10 year risk free rate.

It has been a bearish month for S-REITs. Poor performers include Capitaland Integrated Commercial Trust (-10.43% decline in market cap), Prime US REIT (-25.96%), Manulife US REIT (-14.06%), EC World REIT (-21.74%) and Keppel Pacific Oak REIT (-16.51%). 

 Yield spread (in reference to the 10-year Singapore government bond yield of 3.42% as of 5 Mar 2023) widened slightly from 4.12% to 4.21%. 

Technically, FTSE ST REIT Index is trading in a short-term uptrend channel (higher high, higher low chart pattern) since finding the bottom in Oct 2022. Currently the REIT index is consolidating between 734-744. The short-term uptrend is still intact unless the 714 support is broken. If 744 resistance is broken, it is expected the S-REIT index to continue the bullish rebound with the next target 790-800 to breakout to enter into bull market. 

Based on the current overall S-REIT P/NAV of 0.84 and the potential peaking of interest rate in Q2/Q3 2023, the probability to have a severe crash in S-REIT is low unless we are entering into severe recession with big drop in DPU and US Fed continues to increase the interest rate fiercely beyond 6%.) 2023 would be a cautiously bullish for S-REIT with fundamentally strong S-REITs.

Note: This above analysis is for my own personal research and it is NOT a buy or sell recommendation. Investors who would like to leverage my extensive research and years of Singapore REIT investing experience can approach me separately for a REIT Portfolio Consultation.