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
|Type of Property
|SOILBUILD BUSINESS SPACE REIT||SV3U||683||Diversified||2.3||19.0||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|
|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|
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.
|Type of Property
|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|
|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|
|FAR EAST HOSPITALITY TRUST *||Q5T||1139||Hospitality||-4.2||-0.6||4.2||41||0.7|
|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|
|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|
|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|
|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|
|SOILBUILD BUSINESS SPACE REIT||SV3U||683||Diversified||2.3||19.0||7.4||39||1.0|
|STARHILL GLOBAL REIT||P40U||1157||Retail||7.7||-17.0||5.0||36||0.6|
|UNITED HAMPSHIRE US REIT||ODBU||439||Retail||6.3||-14.2||7.4||36||0.9|