With global inflation set to outpace global growth by 5% in 2022, the FTSE ST REIT Index has generated a 10% decline in total return this year, with the FTSE EPRA/NAREIT Developed Index declining 22%. This has brought the 5-year total return of the FTSE ST REIT Index to 15%, compared to 8% for the FTSE EPRA/NAREIT Developed Index.
The FTSE ST REIT Index ended 18 Nov at a 7% discount to book value, up from a 16% discount a month ago. Since 21 Oct, majority expectations for the 14 FOMC Fed Funds Rate have markedly moved from 75bps to 50bps, while the 10-year U.S. Treasury yields have declined from above 4.2% to below 3.8%.
The most defensive REITs and property trusts in the 2022-to-date included CDL Hospitality Trusts, Far East Hospitality Trust, Sabana Industrial REIT, CapitaLand Integrated Commercial Trust and Suntec REIT. Sabana Industrial REIT, CapitaLand Integrated Commercial Trust and CDL Hospitality Trusts also ranked among the 5 Trusts that booked the highest year-to-date net institutional fund inflows proportionate to current market value.
Over the past month, the FTSE ST REIT Index has generated a 12.0% total return on the back of a marginally less hawkish outlook for US Interest rates. This has also seen the US 10-Year Treasury yields decline from above 4.2% on 21 Oct to below 3.8% at present, with the US Dollar Index also declining from above 113 to near 107.
The partial rebound of the S-REIT Sector over the past month has also pared the FTSE ST REIT Index decline in total return for the 2022-to-date (as of 18 Nov) to 10%, compared to the FTSE EPRA/NAREIT Developed Index declining 22%. This brings the 5-year total return of the FTSE ST REIT Index to 15%, compared to 8% for the FTSE EPRA/NAREIT Developed Index.
As illustrated below, the FTSE ST REIT Index has maintained some directional correlation, albeit not statistically significant correlation to the FTSE EPRA/NAREIT Developed Index over the past 5 years. While the FTSE EPRA/NAREIT Developed Index is more than 60% weighted to US-listed REITs, both S-REITs and US-listed REITs do compete with US Treasury Yields for fund inflows. The aforementioned decline in 10-Year US Treasury Yields coincided with the P/B ratio of the FTSE ST REIT Index increasing from 0.84x to 0.93.
Over the past 5 years, there have only been 6 weeks when the P/B ratio of the FTSE ST REIT Index ended the week below 0.90x.
Overall the S-REIT sector has seen more than S$1 billion of net institutional fund outflows in the 2022-to-date as of 18 Nov, with 32 of the trusts booking net institutional fund outflows and 8 of the trusts booking net institutional fund inflows. The 5 S-REITs that saw the highest net institutional fund inflows currently average a 0.85x P/B ratio, whereas the 5 S-REITs that booked the highest net institutional fund outflows currently average a 1.15x P/B ratio.
The following 5 S-REITs/Trusts saw the highest net institutional fund inflows in the 2022-to-date averaged 2.3% total return:
- CapitaLand Integrated Commercial Trust (SGX:C38U),
- Sabana Industrial REIT (SGX:M1GU),
- CapitaLand Ascott Trust (SGX:HMN),
- CDL Hospitality Trusts (SGX:J85) and
- Frasers Hospitality Trust (SGX:ACV).
The following 5 S-REITs/Trusts saw the highest net institutional fund outflows in the 2022-to-date averaged negative 10.1% in total return:
- Mapletree Industrial Trust (SGX:ME8U),
- Keppel DC REIT (SGX:AJBU),
- Mapletree Pan Asia Commercial Trust (SGX:N2IU),
- CapitaLand Ascendas REIT (SGX:A17U) and
- Mapletree Logistics Trust (SGX:M44U).
The table below details SGX listed REITs and Property Trusts' returns and net institutional fund flow in 2022-to-date, sorted by the averaged daily turnover in S$.
|SGX Listed REITs & Property Trusts||SGX
|CapitaLand Integrated Commercial Trust||C38U||49.0||13,463||6||2||102.7||0.96|
|CapitaLand Ascendas REIT||A17U||33.2||11,553||2||-2||-110.5||1.12|
|Mapletree Pan Asia Commercial Trust||N2IU||27.7||9,163||3||-7||-127.7||0.94|
|Mapletree Logistics Trust||M44U||25.3||7,936||7||-9||-72.5||1.05|
|Mapletree Industrial Trust||ME8U||16.8||6,219||-2||-10||-174.8||1.13|
|Frasers Logistics & Commercial Trust||BUOU||13.4||4,214||-4||-20||-69.3||0.87|
|Keppel DC REIT||AJBU||11.5||3,180||9||-22||-136.4||1.35|
|Frasers Centrepoint Trust||J69U||7.4||3,459||-4||-7||-42.9||0.87|
|CapitaLand Ascott Trust *||HMN||7.4||3,291||-3||-3||9.4||0.75|
|CapitaLand China Trust||AU8U||4.9||1,791||3||-5||-71.9||0.66|
|Digital Core US REIT||DCRU||4.8||908||-20||-47||-13.4||0.67|
|CapitaLand India Trust **||CY6U||3.3||1,428||17||-8||-36.9||1.03|
|CDL Hospitality Trusts *||J85||2.9||1,559||8||12||9.2||0.96|
|Manulife US REIT||BTOU||2.0||903||-17||-41||-25.7||0.53|
|Frasers Hospitality Trust *||ACV||1.9||838||-7||-3||6.5||0.67|
|AIMS APAC REIT||O5RU||1.7||912||1||-6||-24.6||0.66|
|Prime US REIT||OXMU||1.1||811||-11||-33||-23.6||0.58|
|Far East Hospitality Trust *||Q5T||1.1||1,193||3||7||0.3||0.70|
|Cromwell European REIT||CWBU||0.9||1,270||-10||-37||-12.6||0.60|
|Keppel Pac Oak US REIT||CMOU||0.9||840||2||-19||-17.3||0.70|
|OUE Commercial REIT||TS0U||0.7||1,885||1||-17||-15.8||0.56|
|Daiwa House Logistics Trust||DHLU||0.7||426||5||-18||-23.0||0.75|
|Elite Commercial REIT||MXNU||0.4||385||7||-28||-8.4||0.79|
|United Hampshire US REIT||ODBU||0.3||388||-11||-18||-14.6||0.66|
|Sabana Industrial REIT||M1GU||0.3||471||0||4||12.4||0.82|
|EC World REIT||BWCU||0.3||393||-3||-32||-5.9||0.61|
|Lippo Malls Indonesia Trust||D5IU||0.2||239||-11||-38||-8.2||0.26|
|Dasin Retail Trust **||CEDU||0.2||221||-4||-20||-1.7||0.23|
|ARA US Hospitality Trust *||XZL||0.1||293||-5||-21||0.6||0.52|
|BHG Retail REIT||BMGU||0.1||259||-7||-15||1.5||0.57|