SGX Market Updates

5 Best-Performing S-REITs Average 6% Total Return in July-Oct 2018


05 November 2018

  • The iEdge S-REIT Index is a free-float, market capitalisation-weighted index that tracks the performance of listed REITs in Singapore. The Index’s 36 constituents have a combined market capitalisation of nearly S$80 billion.

  • In July-October 2018, the 10 best-performing constituents of the Index were: Ascendas India Trust (+6.9%), Starhill (+5.5%), Mapletree Commercial (+5.4%), Keppel REIT (+5.2%), Suntec REIT (+5.2%), CapitaLand Commercial (+4.7%), Frasers Hospitality (+4.4%), CapitaLand Mall (+3.3%), Frasers Commercial (+2.7%) and SPH REIT (+2.3%).

  • Of these 10 trusts, the five best performers have averaged a total return of +5.7% over the four months, bringing their YTD and 3Y total returns to -5.3% and +30.4% respectively.

There are 34 Real Estate Investment Trusts (REITs), six stapled trusts and three property trusts listed on SGX. The sector has a combined market capitalisation of close to S$100 billion, with Retail, Industrial and Office REITs making up the largest segments.

The iEdge S-REIT Index is a free-float, market capitalisation-weighted index that tracks the performance of listed REITs in Singapore. The Index’s 36 constituents comprise 28 REITs, six stapled trusts and two property trusts, and have a combined market capitalisation of nearly S$80 billion.

In the July-October 2018 period, the 10 best-performing constituents of the iEdge S-REIT Index were: Ascendas India Trust (+6.9%), Starhill Global REIT (+5.5%), Mapletree Commercial Trust (+5.4%), Keppel REIT (+5.2%), Suntec REIT (+5.2%), CapitaLand Commercial Trust (+4.7%), Frasers Hospitality Trust (+4.4%), CapitaLand Mall Trust (+3.3%), Frasers Commercial Trust (+2.7%) and SPH REIT (+2.3%).

Of these 10 trusts, the five best performers have averaged a total return of +5.7% over these four months, bringing their YTD and three-year total returns to -5.3% and +30.4% respectively.

Singapore REITs are currently facing a higher interest-rate environment. Since January 2017, the Federal Reserve has raised US interest rates six times – with the most recent hike in September. The Fed has signalled its intention to raise rates again in December, and three more times next year, as it assumes the world’s largest economy continues to grow moderately and inflation remains in check.

Two more Federal Open Market Committee (FOMC) meetings are scheduled for the remainder of the year – later in the week on 7-8 November, and again on 18-19 December.

Despite the less-than-favourable backdrop, analysts have noted revived investor interest in Singapore REITs recently. This has been driven by a flight to safety amidst rising risk-aversion, as US-Sino trade tensions continue to simmer and ahead of the US mid-term elections, which are seen as a referendum on the policies of President Donald Trump. Sentiment has also been boosted by improving fundamentals in the domestic office and hotel property segments, DBS Group Research noted in a sector report published on 24 Aug 2018.

DBS Research pointed to “green shoots” across all real estate subsectors, noting that the office segment remains its preferred sector as a result of a sustained improvement in office rents. For the retail sector, the pace of negative rental revisions has moderated, while industrial rents are bottoming, with the odds of a recovery next year increasing, it added.

The table below details the 10 best-performing REITs in the iEdge S-REIT Index, sorted by July-Oct total returns.

Name SGX
Market Cap
Total Return
July-Oct (%)
Total Return
YTD (%)
Total Return
3Y (%)
Dvd Ind
Yld %
~Ratio (%)
Ascendas India Trust CY6U 1,120.2 6.9 -3.1 45.9 6.4 32.0
Starhill Global REIT P40U 1,461.4 5.5 -9.4 0.3 6.8 35.4
Mapletree Commercial Trust N2IU 4,648.3 5.4 5.0 40.8 5.6 34.8
Keppel REIT K71U 3,855.0 5.2 -6.0 38.0 5.0 39.1
Suntec REIT T82U 4,727.0 5.2 -13.3 26.9 5.7 38.2
CapitaLand Commercial Trust C61U 6,476.7 4.7 -6.1 49.0 4.8 35.3
Frasers Hospitality Trust ACV 1,317.8 4.4 -7.2 16.4 6.8 33.6
CapitaLand Mall Trust C38U 7,488.2 3.3 3.1 23.7 5.4 31.7
Frasers Commercial Trust ND8U 1,222.8 2.7 -1.7 24.0 7.0 28.3
SPH REIT SK6U 2,543.5 2.3 -0.9 23.9 5.6 26.3
Average 4.6 -4.0 28.9 5.9 33.5

Source: Bloomberg & StockFacts (data as of 31 Oct 2018)
~ Data as of 30 Sept 2018 except for SPH REIT (31 Aug 2018)

Recent Earnings Highlights of the 3 Best-Performing REITs in July-Oct 2018

Ascendas India Trust Sees Healthy Rental Growth

For the fiscal second quarter ended 30 September 2018, Ascendas India Trust reported a 32% YoY gain in distribution per unit (DPU) to 1.98 Singapore cents, while net property income rose 4% to S$32.9 million. This was mainly due to incremental income contributions from the acquisitions of BlueRidge 2 and Arshiya warehouses, higher interest income from investments in its IT parks via construction funding and positive rental reversions.

The trust noted that its committed portfolio occupancy remained robust at 97% as of 30 September 2018, and it continues to make good progress in leasing out its new properties. It also expects a growth boost from its recently announced acquisitions in Hyderabad, a market that is seeing healthy rental growth following strong demand from global IT companies.

a-iTrust had a gearing ratio of 32% as at 30 September 2018. Based on its current gearing limit of 45%, the trust has total debt headroom of S$477 million. Of its total borrowings, 84% are effectively on a fixed-rate basis and 62% were hedged into Indian Rupees.

Click here for the full earnings release.

Starhill Global REIT Maintains Robust Financial Position

For the fiscal first quarter ended 30 September 2018, Starhill Global REIT reported a 4.2% YoY decline in DPU to 1.15 Singapore cents, while net property income fell 2.3% to S$40.4 million. It noted that higher contributions from the Singapore office portfolio and Plaza Arcade in Perth following the completion of their asset redevelopment, as well as the appreciation of the Malaysian ringgit, were offset by lower contributions from the retail portfolio in Singapore and the depreciation of the Australian dollar.

The trust has a stable gearing level of 35.4% and has hedged about 92% of its borrowings as at 30 September 2018. Average debt maturity is approximately 3.5 years, with no refinancing requirement for its existing debt portfolio until September 2019. In July 2018, it refinanced its A$63 million secured term loan for five years with the same bank ahead of its maturity in June 2019. It has available undrawn long-term committed revolving credit facilities to cover the RM330 million (or approximately S$109 million) Medium Term Notes maturing in September 2019.

Click here for the full earnings release.

Mapletree Commercial Trust Achieves Steady Operational Performance

For the fiscal second quarter ended 30 September 2018, Mapletree Commercial Trust reported a 1.3% YoY increase in DPU to 2.27 Singapore cents, while net property income gained 2.2% to S$86.3 million, driven by higher contributions from VivoCity, Mapletree Business City I and Bank of America Merrill Lynch HarbourFront. As at 30 September 2018, the committed occupancy of the portfolio remained high, at 98.7%.

In July and August 2018, the trust obtained term loan facilities aggregating S$345.0 million, thus completing refinancing of all term loans due in FY18/19 and FY19/20. This extended its average term to maturity to 4.1 years from 3.6 years as at 30 June 2018, with an aggregate leverage of 34.8% as at 30 September 2018. About 75.2% of the total debt of S$2.3 billion has been fixed by way of fixed-rate debt or interest rate swaps, providing certainty on interest expense. As a result of proactive capital management, the trust has maintained ample debt headroom of about S$1.2 billion (based on the 45% regulatory limit). Overall, its debt maturity profile remains well-distributed with no more than 20% of debt due for refinancing in any financial year.

Click here for the full earnings release.

Did You Know

REITs and Stapled Trusts invest in a diversified pool of professionally managed real estate assets and raise capital to purchase primarily real estate assets, usually with a view to generate income for unit holders of the fund. Like stocks, REITs and Stapled Trusts have market risk – unit prices can move against the investor’s expectations. Other risks associated with a REIT or Stapled Trust investment can vary, and depend on the unique characteristics of each Trust (i.e. leverage ratio, cost of refinancing, alignment of management fees), as well as the geographical location and quality of the underlying property assets (i.e. concentration of properties, length of lease). Other risks associated with stock investing (i.e. price risk, volatility and liquidity risks) also apply.

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