To The Moon

Technical Analysis of FTSE ST REIT Index (FSTAS351020)

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 737.39 to 723.18 (-1.91%) compared tolast month’s update. The REIT Index is rebounding and trading in an upward parallel channel. The 20D SMA has just crossing up the 50D SMA indicate a short-term bullish up trend.

• Short-term direction:Up (Parallel Channel, 20D SMA is sloping up)
• Medium-term direction:Down (50D SMA is sloping down)
• Long-term directionDown (200D SMA is sloping down)
• Immediate Support at 720 (Parallel Channel, 20D SMA)
• Immediate Resistance at 747

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post:Singapore REIT Fundamental Comparison Tableon November 13rd, 2022.

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 there 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 highlighted are now updated with the latest Q3 2022 business updates/earnings.
• Ascott Residence Trust has been renamed to Capitaland Ascott Trust. Ascendas REIT has been renamed to Capitaland Ascendas REIT.

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

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 December 2nd 2022.
• Digital Core REIT and Daiwa House Logistics Trust: Yield calculated from trailing six months distribution, TTM yield is annualised.
• 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/NAVdecreased slightly to 0.80.
• Decreased from 0.81 from November 2022.
• There has been a recent sell-off in September-October period.
• 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 = 1.61)
• Keppel DC REIT (Price/NAV = 1.33)
• Capitaland Ascendas REIT (Price/NAV = 1.15)
• Mapletree Industrial Trust (Price/NAV = 1.14)
• Mapletree Logistics Trust (Price/NAV = 1.10)
• SPH REIT (Price/NAV = 0.98)
• Only 5 REITs are overvalued now based on Price/NAV value.
• No change in the Top 2 compared to last month.

• Most undervalued REITs (based on Price/NAV)
• Lippo Malls Indonesia Retail Trust (Price/NAV=0.34)
• ARA Hospitality Trust (Price/NAV = 0.53)
• Manulife US REIT (Price/NAV = 0.54)
• Prime US REIT (Price/NAV = 0.55)
• EC World REIT (Price/NAV = 0.56)
• BHG Retail REIT (Price/NAV = 0.57)
• No change in the Top 3 compared to last month.

Distribution Yields Overview

• TTM Distribution Yieldincreased to 7.67%.
• Increased from 7.58% in November 2022.
• 18 of 40 Singapore REITs have distribution yields of above 7%. (same as last 2 months’ update)
• 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. The recent sell-off contributed to the increase in average yield.
• 9 REITs have a ttm yield of over 10%!
• Highest Distribution Yield REITs (ttm)
• Prime US REIT (14.67%)
• Manulife US REIT (13.97%)
• EC World REIT (12.60%)
• United Hampshire US REIT (12.16%)
• Lippo Malls Indonesia Retail Trust (12.00%)
• Keppel Pacific Oak US REIT (11.38%)
• 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 Yieldshould notbe the sole ratio to look for when choosing a REIT to invest in.
• Yield Spread widened to 4.61%.
• Widened from 4.17% in November 2022.

Gearing Ratios Overview

• Gearing Ratioremained at 37.03%.
• Remained at 37.03% in November 2022.
• Gearing Ratios are updated quarterly. Therefore, no REITs have updated their gearing ratios in the past month.

• Highest Gearing Ratio REITs
• Lippo Malls Indonesia Retail Trust (43.7%)
• ARA Hospitality Trust (43.3%)
• Suntec REIT (43.1%)
• Manulife US REIT (42.5%)
• United Hampshire US REIT (42.1%)
• Elite Commercial REIT (41.9%)

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisationdecreased by 1.16%to S$95.11 Billion.
• Decreased from S$96.23 Billion in November 2022.

• Biggest Market Capitalisation REITs:
• Capitaland Integrated Commercial Trust ($13.39B)
• Capitaland Ascendas REIT ($11.55B)
• Mapletree Pan Asia Commercial Trust ($8.64B)
• Mapletree Logistics Trust ($7.68B)
• Mapletree Industrial Trust ($5.95B)
• Frasers Logistics & Commercial Trust ($4.18B)
• No change in the rankings since September 2022.

• Smallest Market Capitalisation REITs:
• Lippo Malls Indonesia Retail Trust ($231M)
• BHG Retail REIT ($257M)
• ARA Hospitality Trust ($289M)
• EC World REIT ($364M)
• United Hampshire US REIT ($371M)
• Elite Commercial REIT ($394M)
• No change in the rankings from last month’s update.

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 asubsidised 2-day coursewith all you need to know about REITs and how to start investing in them.

Top 20 Best Performers of the Month in November 2022

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

SG 10 Year & US 10 Year Government Bond Yield

• SG 10 Year: 3.00% (decreased from 3.48%)
• US 10 Year: 3.49% (decreased from 3.82%)

Major REIT News in November 2022

There are no major REIT happenings for the month of November 2022.

Summary

Fundamentally, the whole Singapore REITs landscape is very undervalued based on the average Price/NAV (at 0.80) value of the S-REITs, which is quite rare that S-REIT is trading at such huge discount with a very attractive DPU yield of 7.67%! This is even higher than that of last month. Below is the market cap heat map for the past 1 month. The performance of REITs are evenly split.18 REITs have been bullish while 15 REITs have been bearish the last 30 days. There is no clear correlation with market cap in terms of performance.

(Source: https://stocks.cafe/kenny/overview)

Yield spread (in reference to the 10-year Singapore government bond yield of 3.00% as of 3rd December 2022) widened from 4.17% to 4.61%.This is a huge increase of 0.44%. This is due to the large decrease in Government Bond Yields (about 0.40%), while the S-REIT Average Yield increased from 7.58% to 7.67%.This resulted in the widening of the yield spread.

Technically, FTSE ST REIT Index is trading in a bearish territory but rebounded strongly from the support level. Based on the past chart patterns, REIT Index used to have a strong V-shaped rebound when there was a huge sell off with a very attractive valuation & DPU yield. Is this a bull trap or dead cat bounce? Is this the time to do bottom fishing to lock in the current attractive valuation and yield? Or is it better to wait for a very clear bull signal first before investing in Singapore REITs? No one will know the exact answer but more importantly investors should focus on their own financial objective, time horizon and risk appetite.

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.

Kenny Loh is an Associate Wealth Advisory Directorand 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