Singapore real estate investment trusts (S-REITs) have had a tough time in 2022.
With central banks increasing their interest rates to curb the high inflation rate, investors seem to be spooked that the higher interest rates could lead to lower distribution per units (DPUs) that they generally rely upon.
We explore how Singapore REITs have performed thus far and what are some of the REITs with the highest distribution yields on the Singapore Exchange (SGX).
How Singapore REITs Performed In 2022 Year-to-Date
Firstly, we can look at how the iEdge S-REIT Leaders Index has performed in the 2022 year-to-date period to get a sense of how Singapore REITs, in general, have done unit price-wise. The iEdge S-REIT Leaders Index measures the performance of the most liquid REITs listed on the Singapore Exchange (SGX).
Source: SGX
From the start of 2022 till 22 August, the iEdge S-REIT Leaders Index has fallen some 3% – from around 1,367 points to 1,327 points. At one point, the index was down almost 8% in mid-June 2022 before recovering some ground.
During the same 2022 year-to-date period, Singapore’s benchmark index, the Straits Times Index (STI), increased by 4%. This clearly shows that the iEdge S-REIT Leaders Index has underperformed the STI.
The underperformance could suggest that investors were worried that the REITs’ distributions could be impacted by the rise in interest rates.
Having said that, Singapore REITs have outperformed their global peers. The S&P Global REIT Index, a benchmark of publicly traded equity REITs listed in both developed and emerging markets, is down more than 15% (year-to-date period up to 19 August 2022).
Source: S&P Global
How Did Individuals REITs In Singapore Perform In YTD 2022?
| No. | REITs, Stapled Securities And Other Trusts, And ETFs | Price (SGD)* | YTD Total Returns (%)** |
| REITs and Stapled Securities | |||
| Commercial/Office REITs | |||
| 1 | Cromwell European REIT (SGX: CWBU) | EUR 2.09 | -14.9 |
| 2 | Elite Commercial REIT (SGX: MXNU) | GBP 0.605 | -2.3 |
| 3 | IREIT Global (SGX: UD1U) | 0.575 | -4.4 |
| 4 | Keppel REIT (SGX: K71U) | 1.1 | 0.8 |
| 5 | Keppel Pacific Oak US REIT (SGX: CMOU) | USD 0.650 | -9.5 |
| 6 | Manulife US REIT (SGX: BTOU) | USD 0.530 | -13.0 |
| 7 | OUE Commercial REIT (SGX: TS0U) | 0.37 | -9.7 |
| 8 | Prime US REIT (SGX: OXMU) | USD 0.645 | -12.6 |
| 9 | Suntec REIT (SGX: T82U) | 1.59 | 9.6 |
| Retail REITs | |||
| 10 | BHG Retail REIT (SGX: BMGU) | 0.52 | -13.1 |
| 11 | CapitaLand China Trust (SGX: AU8U) | 1.14 | 0.7 |
| 12 | Frasers Centrepoint Trust (SGX: J69U) | 2.28 | 3.5 |
| 13 | Lendlease Global Commercial REIT (SGX: JYEU) | 0.845 | 0.3 |
| 14 | Lippo Malls Indonesia Trust (SGX: D5IU) | 0.039 | -8.1 |
| 15 | Mapletree Commercial Trust (SGX: N2IU)*** | 1.93 | -2.4 |
| 16 | Mapletree North Asia Commercial Trust (SGX: RW0U)*** | N/A | N/A |
| 17 | Sasseur REIT (SGX: CRPU) | 0.78 | -2.2 |
| 18 | SPH REIT (SGX: SK6U) | 0.94 | -1.3 |
| 19 | Starhill Global REIT (SGX: P40U) | 0.58 | -6.5 |
| 20 | United Hampshire US REIT (SGX: ODBU) | USD 0.600 | -4.8 |
| Integrated REIT (Retail + Commercial) | |||
| 21 | CapitaLand Integrated Commercial Trust (SGX: C38U) | 2.08 | 7.1 |
| Industrial REITs | |||
| 22 | AIMS APAC REIT (SGX: O5RU) | 1.37 | -0.9 |
| 23 | Ascendas REIT (SGX: A17U) | 2.95 | 3.4 |
| 24 | EC World REIT (SGX: BWCU) | 0.55 | -27.4 |
| 25 | ESR-LOGOS REIT (SGX: J91U) | 0.405 | -9.1 |
| 26 | Frasers Logistics & Commercial Trust (SGX: BUOU) | 1.42 | -2.6 |
| 27 | Keppel DC REIT (SGX: AJBU) | 1.97 | -14.8 |
| 28 | Mapletree Industrial Trust (SGX: ME8U) | 2.68 | 2.8 |
| 29 | Mapletree Logistics Trust (SGX: M44U) | 1.79 | -4.5 |
| 30 | Sabana Industrial REIT (SGX: M1GU) | 0.44 | 6.1 |
| Hospitality REITs | |||
| 31 | ARA US Hospitality Trust (SGX: XZL) | USD 0.475 | -4.3 |
| 32 | Ascott Residence Trust (SGX: HMN) | 1.14 | 15.5 |
| 33 | CDL Hospitality Trust (SGX: J85) | 1.28 | 15.7 |
| 34 | Far East Hospitality Trust (SGX: Q5T) | 0.63 | 11.3 |
| 35 | Frasers Hospitality Trust (SGX: ACV) | 0.705 | 51.1 |
| Healthcare REITs | |||
| 36 | First REIT (SGX: AW9U) | 0.275 | -4 |
| 37 | Parkway Life REIT (SGX: C2PU) | 4.86 | -5.9 |
| Other Property Trusts | |||
| 38 | Ascendas India Trust (SGX: CY6U) | 1.19 | -15.9 |
| 39 | Dasin Retail Trust (SGX: CEDU) | 0.29 | -5.9 |
| REIT ETFs | |||
| 41 | Lion-Phillip S-REIT ETF (SGX: CLR) | 1.02 | (0.20) **** |
| 42 | NikkoAM-Straits Trading Asia Ex Japan REIT ETF (SGX: CFA) | 1.044 | (1.17) **** |
| 43 | Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ) | 1.289 | (8.56) **** |
| 44 | CSOP iEdge S REIT Leaders ETF (SGX: SRT) |
0.95 | (0.19) **** |
| 45 | UOB Asia Pacific (APAC) Green REIT ETF (SGX: GRN) |
0.86 | (10.12) **** |
*Price (SGD) is based on 22 August 2022 at time of writing, with the currency in SGD unless otherwise stated
**YTD Total Returns derived from SGX SREITs & Property Trusts Chartbook – August 2022 (data as of 31 July 2022)
***Mapletree Commercial Trust and Mapletree North Asia Commercial Trust merged to form Mapletree Pan Asia Commercial Trust. Mapletree North Asia Commercial Trust was delisted
****YTD Total Returns for REIT ETF derived from Fundsupermart
3 Best Performing S-REITs In 1H 2022
- Frasers Hospitality Trust (51.1%)
- CDL Hospitality Trust (15.7%)
- Ascott Residence Trust (15.5%)
All three top performing S-REITs in 2Q 2022 are within the hospitality sector. While that’s interesting, it perhaps is not as surprising given that they were likely the biggest losers of border closures, and countries across the world have generally re-opened since the second half of 2021.
Frasers Hospitality Trust was the best performer, having gone up 51%. Most of the gains can be attributed to the trust’s proposed privatisation.
In June this year, Frasers Property Hospitality Trust Holdings, a wholly owned subsidiary of Frasers Property Limited(SGX: TQ5), announced that it wants to take Frasers Hospitality Trust private through a trust scheme of arrangement.
The acquirer is looking to privatise Frasers Hospitality Trust at a unit price of S$0.70, a premium of 43.8% over the 12-month volume-weighted average prices (VWAP).
The price translates to an implied price-to-book multiple of 1.07x, which exceeds historical averages of the trust’s trading multiples since its initial public offering (IPO), then-current trading multiples of other listed Singapore hospitality trusts, and previous S-REIT privatisations.
Frasers Hospitality Trust unitholders can vote in favour or against the privatisation at an extraordinary general meeting and scheme meeting that will take place on 9 September 2022.
The two other strong performers include CDL Hospitality Trust and Ascott Residence Trust. The two hospitality trusts posted higher distribution payouts in their latest earnings period due to the reopening of international borders and pent-up travel demand.
CDL Hospitality Trust’s first-half distribution per stapled security (DPS) soared 67.2% as solid leisure demand led to increasing occupancy rates at its hotels. The trust declared a first-half dividend of 2.04 cents, compared with 1.22 cents a year ago.
Likewise, Ascott Residence Trust said that its DPS came in at 2.33 cents for the first half ended 30 June 2022, rising 14% compared with a year before.
3 Worst Performing S-REITs in YTD 2022
- EC World REIT (-27.4%)
- Ascendas India Trust (-15.9%)
- Cromwell European REIT (-14.9%)
EC World REIT was the worst performer among Singapore REITs with a decline of 27.4%.
For the first half of 2022, EC World REIT posted a 9.6% year-on-year fall in distribution per unit (DPU), despite its gross revenue increasing by 2.2%.
The lower DPU was largely due to a recognition of pre-termination compensation to a third-party tenant following a compulsory expropriation of its Fu Zhuo Industrial asset, and higher retained income paid out last year.
EC World REIT’s auditors, PwC, previously highlighted a material uncertainty in its FY2021 financial statements on the REIT’s ability to continue as a going concern. On 6 July 2022, the REIT’s manager updated that the REIT had successfully extended the maturity date of its outstanding debt facilities to 30 April 2023 and that the manager was exploring various fund-raising options.
Ascendas India Trust units slumped around 16%, despite posting growing DPU for its latest financial period.
For the first half of 2022, Ascendas India Trust’s total property income in Singapore dollar terms rose 6% year-on-year while its DPU grew 19% to 4.28 Singapore cents. The trust said that as India resumes normalcy, it is witnessing an increase in physical park population across its business parks, with 36% of the park population returning to office, as of end-June 2022.
Lastly, Cromwell European REIT, which has properties scattered across Denmark, the Netherlands, Italy, Finland, Germany, Poland, and France, saw its units fall by 14.9%. The REIT saw its gross revenue increase 8.5% year-on-year to €107.4 million, while its DPU grew 2.3% to 8.695 Euro cents for the first half of 2022.
3 REITS With Best Distribution Yield in YTD 2022
According to the SGX S-REITs & Property Trusts Chartbook (August 2022), the REITs with the highest distribution yields (as of 15 August) are:
- EC World REIT (11.1%)
- Prime US REIT (9.8%)
- United Hampshire US REIT (9.7%)
With EC World REIT’s units falling substantially in the year-to-date period, as discussed earlier, its distribution yield has shot up to 11%.
The lesson here is that investors should go beyond the headline distribution yields and analyse whether a REIT’s high yield is sustainable by exploring its asset quality, lease expiry profile, and balance sheet, among other things.
Another common thread among the three REITs with the highest distribution yields is that they contain overseas assets. Prime US REIT and United Hampshire US REIT, as the name might suggest, have properties based in the United States.
Local investors may not be comfortable owning a REIT with overseas properties as they are unable to physically “see” them as compared to REITs with assets located in Singapore, such as Frasers Centrepoint Trust.
In general, REITs with overseas assets tend to trade at high yields due to investors’ unfamiliarity with such REITs. Those who have insights into S-REITs with overseas properties could take advantage of their high distribution yields.
This article was written by Sudhan P, an investment analyst who is an avid investor of businesses listed on the stock market for over a decade now and is a huge advocate of investor education.
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