SGX Market Updates

SGX 5 Best-Performing S-REITs Average 20% Total Return in 2019 YTD


PUBLISHED ON |

02 April 2019

  • In the months of Jan, Feb and March 2019, Singapore REITs have seen net institutional inflows of S$82.7 million, S$42.7 million and S$114.2 million respectively, according to SGX data.

  • Analysts have noted revived investor interest in S-REITs since late last year, driven by a flight to safety amidst the uncertain outlook for US-Sino trade negotiations, the hunt for higher yields, and as global equity markets remained volatile. Recent dovish signals from the US Federal Reserve suggesting a pause in the rate hike cycle has also buoyed sentiment on the sector.

  • In the YTD, the five best-performing S-REITs were: Sasseur REIT (25.0%), Capitaland Retail China Trust (19.4%), Keppel-KBS US REIT (18.2%), Mapletree Logistics Trust (17.6%), and Mapletree North Asia Commercial Trust (17.6%). They have averaged a total return of 19.6% in the YTD, bringing their 1Y total return to 11.0%.




There are 34 Real Estate Investment Trusts (REITs), 5 stapled trusts and 3 property trusts listed on SGX. The sector has a combined market capitalisation of nearly S$100 billion, with Retail, Industrial and Office REITs making up the largest segments.

Investor Participation in S-REITs

Since late last year, analysts have noted revived investor interest in S-REITs, driven by a flight to safety amidst the uncertain outlook for US-Sino trade negotiations, the hunt for higher yields, and as global equity markets remain volatile.

In the months of January, February and March, Singapore REITs have seen net institutional inflows of S$82.7 million, S$42.7 million, and S$114.2 million respectively, which brings the sector’s inflows to S$239.6 million for the first quarter of 2019, SGX data showed. S-REITs was also the top net buy sector in January.

Institution Inflows to S-REITS



Sector Fundamentals and Outlook

The relatively strong fundamentals of S-REITs – about 80% of the trusts across various segments have hedged at least 70% of their debt with fixed rates, while all are required by regulation to have a maximum gearing ratio of 45% – should also help mitigate the impact of the higher interest-rate environment.

Further boosting the sector were dovish signals from the US Federal Reserve during its March 20 policy-setting meeting, which represented a pivot from its policy stance late last year. Fed officials now expect not to raise rates at all this year, after lifting interest rates four times over the course of 2018. Most officials also anticipate one interest rate increase in 2020 and none in 2021, compared to December, when Fed officials said they expected two rate hikes this year and another in 2020.



Best Performers in the YTD

In the 2019 year-to-date, the 20 best-performing S-REITs – which have a combined market capitalisation of more than S$60 billion – have averaged a total return of 15.7%. This brings their one-year, three-year and five-year total returns to 10.6%, 37.9%, and 51.7% respectively. These 20 trusts have also averaged a price-to-book ratio of 1.0 and a dividend yield of 6.1%. Industrial and office REITs account for the majority of the best performers, with the remainder being hospitality and retail REITs.

Among the 20, the 5 best performers in the YTD were: Sasseur REIT (25.0%), Capitaland Retail China Trust (19.4%), Keppel-KBS US REIT (18.2%), Mapletree Logistics Trust (17.6%), and Mapletree North Asia Commercial Trust (17.6%). These 5 trusts have averaged a total return of 19.6% in the YTD, bringing their one-year total return to 11.0%.

In a S-REITs sector report published on 18 March, RHB Research noted that its preferred sub-sectors were the industrial and hospitality REITs, while investors should buy retail and office REITS on dips. The brokerage added that the supply of industrial space is slowing, even as demand remains relatively stable, while demand-supply conditions in the hospitality sector are ripe for a multi-year recovery.



The table below details the 20 best-performing S-REITs on SGX, sorted by YTD total returns.

Name SGX
Code
Market
Cap
S$m
Total
Return
YTD
%
Total
Return
1Y
%
Total
Return
3Y
%
Total
Return
5Y
%
P/B
(x)
Div Yld
%
SASSEUR REIT CRPU 910 25.0 3.7 NA NA 0.9 8.8
CAPITALAND RETAIL CHINA TRUST AU8U 1,558 19.4 6.5 32.8 56.3 1.0 6.5
KEPPEL-KBS US REIT CMOU 779 18.2 -5.7 NA NA 0.9 7.2
MAPLETREE LOGISTICS TRUST M44U 5,252 17.6 26.2 78.1 93.8 1.2 5.4
MAPLETREE NORTH ASIA COMMERCIAL TRUST RW0U 4,221 17.6 24.4 69.6 128.8 1.0 7.2
FAR EAST HOSPITALITY TRUST Q5T 1,326 17.5 7.2 33.5 17.6 0.8 5.7
FORTUNE REIT F25U 3,430 16.5 14.5 47.4 143.2 0.6 5.1
MAPLETREE COMMERCIAL TRUST N2IU 5,519 16.1 27.2 60.2 109.2 1.3 4.8
OUE COMMERCIAL REIT TS0U 1,472 16.0 -11.2 12.5 15.1 0.7 6.7
CDL HOSPITALITY TRUSTS J85 2,003 15.1 2.2 57.6 41.1 1.1 5.7
KEPPEL REIT K71U 4,391 14.5 11.8 53.1 49.1 0.9 4.3
MANULIFE US REIT BTOU 1,503 14.4 2.5 NA NA 1.0 6.6
ASCENDAS HOSPITALITY TRUST Q1P 999 14.3 16.3 46.5 74.0 0.9 6.8
KEPPEL DC REIT AJBU 2,028 13.9 9.7 68.6 NA 1.4 4.9
CAPITALAND COMMERCIAL TRUST C61U 7,273 13.5 11.2 57.1 74.3 1.1 4.5
ASCENDAS REIT A17U 9,053 13.2 17.5 42.6 73.6 1.3 5.4
ASCOTT RESIDENCE TRUST A68U 2,564 13.0 11.2 38.1 42.3 0.8 6.1
FRASERS LOGISTICS & INDUSTRIAL TRUST BUOU 2,369 12.6 14.8 NA NA 1.3 5.7
MAPLETREE INDUSTRIAL TRUST ME8U 4,265 12.6 10.8 59.7 115.5 1.4 5.7
EC WORLD REIT BWCU 602 12.4 11.9 NA NA 0.9 8.1
Average   15.7 10.6 37.9 51.7 1.0 6.1

Source: Bloomberg & StockFacts (data as of 29 March 2019)







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