SGX Market Updates

S-REITs Yielding 6% & Leading the STI Reserve List


PUBLISHED ON |

08 March 2021

  • Recent moves of the S-REIT Sector have been aligned with global REITs. In-line with the Bloomberg World REIT Index, the S-REITs have averaged a marginal return in the 2021 YTD, and an 8% decline over the past 12 months.

  • The STI Reserve List (in order of highest market cap) are Frasers Logistics & Commercial Trust, Keppel REIT, Suntec REIT, Frasers Centrepoint Trust and NetLink NBN Trust. Should the Jardine Strategic amalgamation resolution be approved at the EGM, the STI Reserve stock with the highest market cap at the close two days prior to the Index deletion of Jardine Strategic will join the STI.

  • The strongest performers of the S-REIT Sector in the 2021 YTD have been ARA LOGOS Logistics Trust, Ascendas India Trust, ARA US Hospitality Trust, ParkwayLife REIT and Sabana Shariah Compliant Industrial REIT, with all 5 trusts generating double digit gains.

  • The 5 REITs that maintained the highest yields and have generated gains over the past 12 months include EC World REIT, Sasseur REIT, Soilbuild Business Space REIT, ARA LOGOS Logistics Trust and Frasers Logistics & Commercial Trust. The 5 REITs average a 6.9% yield.




Key Singapore Sectors Taking Global Cues

Amidst recent equity rotations and rebalancing, higher 10-year US Treasury Yields are coinciding with global bank stocks outpacing global REITs. With the longer end of the US 2-Year/10-Year Yield Curve increasingly pricing an eventual economic normalisation, the Bloomberg World Bank Index has gained 15% versus the Bloomberg World REITs Index gaining 1% in the 2021 year to 5 March.

Key drivers over the past nine weeks are the decline in the COVID-19 infection rates and the pace of the global vaccine rollout. Globally the COVID-19 vaccine doses administered as of 6 March were at 300 million, up from 240 million at the end of February and up from 100 million at the end of January. Meanwhile the potential for new contagious strains of the virus remain a key social, economic and market risk.

With COVID-19 the overarching market driver, that brings similar Sector impacts wherever stocks may be listed, most big Sector moves have been highly correlated over the past 12 months. For instance:

  • Over the past 12 months, the trio of DBS Group, Oversea-Chinese Banking Corporation and United Overseas Bank averaged 17% total returns, in-line with the 17% total return of the Bloomberg World Bank Index in SGD terms.

  • Likewise, the Bloomberg World REITs Index generated a 7% decline in total return over the period, which was also the median total return of the REITs, Stapled Trusts and two Business Trusts that make up the S-REIT Sector. The 42 trusts of the S-REIT Sector that are listed for trading have averaged an 8% decline in total return, whilst the iEdge S-REIT Index also declined 8% over the period.

This has brought the average total return of the trusts that make up the S-REIT Sector to 1.7%, with a median return of 0.4% in the 2021 year to 5 March.



The average 12-month trailing dividend yield of the Sector is 6.2%, with the median yield of 5.6%. The 5 REITs that maintained the highest yields and have generated gains over the past 12 months include EC World REIT, Sasseur REIT, Soilbuild Business Space REIT, ARA LOGOS Logistics Trust and Frasers Logistics & Commercial Trust. These 5 REITs including the 8 REITs that generated gains over the past 12 months on a total return basis are tabled below.

Strongest Performing Trusts of the
S-REIT Sector over past 12 months
Stock
code
Market Cap
S$M
Type of Property
Sub-Segment
2021 YTD
Return
(%)
12-Month
Total Return
(%)
Dividend
Yield
(%)
PARKWAYLIFE REIT C2PU 2571 Healthcare 10.8 21.5 3.4
SOILBUILD BUSINESS SPACE REIT SV3U 683 Diversified 2.3 19.0 7.4
SASSEUR REIT CRPU 1044 Retail 5.5 18.3 7.4
EC WORLD REIT BWCU 596 Industrial 3.5 11.5 7.5
FRASERS LOGISTICS & COMMERCIAL TRUST BUOU 4594 Diversified -5.0 10.9 5.2
ARA LOGOS LOGISTICS TRUST K2LU 895 Industrial 18.0 10.4 7.3
KEPPEL DC REIT AJBU 4361 Specialised -3.5 8.9 3.4
KEPPEL REIT K71U 4286 Office 7.9 0.8 4.9
FAR EAST HOSPITALITY TRUST * Q5T 1139 Hospitality -4.2 -0.6 4.2
AIMS APAC REIT O5RU 926 Industrial 6.5 -1.4 6.2
ELITE COMMERCIAL REIT MXNU 401 Office 5.8 -1.7 6.5
CAPITALAND CHINA TRUST AU8U 2014 Diversified -3.9 -3.8 4.7
CDL HOSPITALITY TRUSTS * J85 1518 Hospitality 0.4 -4.1 4.1
LENDLEASE GLOBAL COMMERCIAL REIT JYEU 906 Diversified 8.6 -4.6 5.3
ASCENDAS INDIA TRUST ** CY6U 1773 Diversified 14.7 -4.8 5.9

Note: *Stapled Trust, **Business Trust.
Source: SREITs & Property Trust Chartbook, Refinitiv and Bloomberg (Data as 5 March 2021)



Amalgamation of Jardine Strategic Puts STI Reserve List in Focus

The Straits Times Index (“STI”) Reserve List (in order of highest market capitalisation) are Frasers Logistics & Commercial Trust, Keppel REIT, Suntec REIT, Frasers Centrepoint Trust and NetLink NBN Trust. Should the Jardine Strategic amalgamation resolution be approved at the special general meeting, the STI Reserve stock with the highest market cap at the close two days prior to the Index deletion of Jardine Strategic will join the STI.

On 8 March, Jardine Strategic announced that it had agreed to a proposal made by Jardine Matheson on the terms of a recommended cash acquisition by Jardine Matheson of the 15% of Jardine Strategic issued share capital which Jardine Matheson or its wholly-owned subsidiaries do not already own. Under the terms of the acquisition, Jardine Strategic shareholders (other than Jardine Matheson and its wholly-owned subsidiaries) shall be entitled to receive US$33.00 in cash for each Jardine Strategic Share, representing a premium of approximately 20.2% to the closing share price of US$27.45 per Jardine Strategic on 5 March 2021. Both companies report their FY20 (ending 31 Dec) preliminary results on 11 March, and the announcement noted a shareholder circular, setting out the details of the acquisition, the procedures to be followed to approve the acquisition and the notice of the Special General Meeting, will be published as soon as practicable. For more information, click here.



S-REIT Sector Highlights

While on average the trusts of the S-REIT Sector are trading at book value, on a median basis, global REITs are trading at a 4% premium to book value. At the same time, S-REITs maintain a lower debt to asset ratio of 37%, versus 39% for the global medium, and a higher trailing dividend yield with a 5.6% median, versus the global median which is 4.5%. The trust of the S-REIT Sector that are currently listed for trading are detailed below, with the table sort by REIT name.

For more information of the S-REIT Sector click here for the most recently uploaded Chartbook.

Name Stock
Code
Market Cap
S$M
Type of Property
Sub-Segment
2021 YTD
Return
(%)
12-Month
Total Return
(%)
Dividend
Yield
(%)
Debt/ Asset
(%)
P/B
(x)
AIMS APAC REIT O5RU 926 Industrial 6.5 -1.4 6.2 34 0.9
ARA LOGOS LOGISTICS TRUST K2LU 895 Industrial 18.0 10.4 7.3 39 1.4
ARA US HOSPITALITY TRUST * XZL 373 Hospitality 13.2 -33.1 8.6 48 0.6
ASCENDAS INDIA TRUST ** CY6U 1773 Diversified 14.7 -4.8 5.9 30 1.4
ASCENDAS REIT A17U 12174 Industrial -1.1 -11.1 5.0 33 1.3
ASCOTT RESIDENCE TRUST * HMN 3239 Hospitality -1.9 -9.9 3.1 36 1.0
BHG RETAIL REIT BMGU 281 Retail 0.0 -7.1 4.9 36 0.7
CAPITALAND INTEGRATED COMMERCIAL TRUST C38U 13595 Diversified -2.0 -13.3 4.1 41 1.0
CAPITALAND CHINA TRUST AU8U 2014 Diversified -3.9 -3.8 4.7 32 0.9
CDL HOSPITALITY TRUSTS * J85 1518 Hospitality 0.4 -4.1 4.1 38 0.9
CROMWELL EUROPEAN REIT CNNU 1940 Diversified -5.5 -8.4 7.6 38 0.8
DASIN RETAIL TRUST ** CEDU 568 Retail -7.0 -6.4 5.6 38 0.5
EC WORLD REIT BWCU 596 Industrial 3.5 11.5 7.5 38 0.8
ELITE COMMERCIAL REIT MXNU 401 Office 5.8 -1.7 6.5 31 1.0
ESR-REIT J91U 1342 Industrial -3.1 -25.3 7.3 42 1.0
FAR EAST HOSPITALITY TRUST * Q5T 1139 Hospitality -4.2 -0.6 4.2 41 0.7
FIRST REIT AW9U 328 Healthcare -2.2 -75.4 18.7 49 0.4
FRASERS CENTREPOINT TRUST J69U 4212 Retail 0.8 -16.0 3.6 38 1.1
FRASERS HOSPITALITY TRUST * ACV 973 Hospitality -3.8 -21.5 2.8 38 0.8
FRASERS LOGISTICS & COMMERCIAL TRUST BUOU 4594 Diversified -5.0 10.9 5.2 36 1.3
IREIT GLOBAL UD1U 600 Office 1.8 -6.8 7.7 35 0.7
KEPPEL DC REIT AJBU 4361 Specialized -3.5 8.9 3.4 36 2.3
KEPPEL PACIFIC OAK US REIT CMOU 863 Office 4.6 -7.3 9.2 37 0.8
KEPPEL REIT K71U 4286 Office 7.9 0.8 4.9 37 0.9
LENDLEASE GLOBAL COMMERCIAL REIT JYEU 906 Diversified 8.6 -4.6 5.3 36 0.9
LIPPO MALLS INDONESIA RETAIL TRUST D5IU 472 Retail 0.0 -64.2 11.8 42 0.4
MANULIFE US REIT BTOU 1506 Office -0.3 -29.7 8.5 41 0.9
MAPLETREE COMMERCIAL TRUST N2IU 6632 Diversified -6.1 -10.6 4.1 34 1.2
MAPLETREE INDUSTRIAL TRUST ME8U 6160 Industrial -8.3 -9.5 4.5 37 1.6
MAPLETREE LOGISTICS TRUST M44U 7526 Industrial -8.8 -5.6 4.4 37 1.4
MAPLETREE NORTH ASIA COMMERCIAL TRUST RW0U 3331 Diversified 0.0 -12.5 6.4 41 0.7
OUE COMMERCIAL REIT TS0U 2008 Diversified -0.3 -17.9 6.6 41 0.6
PARKWAYLIFE REIT C2PU 2571 Healthcare 10.8 21.5 3.4 39 2.1
PRIME US REIT OXMU 1117 Office 5.3 -17.6 7.5 34 0.9
SABANA SHARIAH COMP IND REIT M1GU 390 Industrial 10.5 -13.7 7.4 34 0.7
SASSEUR REIT CRPU 1044 Retail 5.5 18.3 7.4 28 0.9
SOILBUILD BUSINESS SPACE REIT SV3U 683 Diversified 2.3 19.0 7.4 39 1.0
SPH REIT SK6U 2334 Retail 0.8 -15.1 3.1 31 0.8
STARHILL GLOBAL REIT P40U 1157 Retail 7.7 -17.0 5.0 36 0.6
SUNTEC REIT T82U 4285 Diversified 2.8 -10.6 5.1 44 0.7
UNITED HAMPSHIRE US REIT ODBU 439 Retail 6.3 -14.2 7.4 36 0.9
Average 1.7 -8.3 6.2 37.3 1.0
Median 0.4 -7.3 5.6 37.3 0.9

Note: * Stapled Trust, ** Business Trust.
Source: SREITs & Property Trust Chartbook, Refinitiv and Bloomberg (Data as 5 March 2021)







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