While Singapore investors may be infatuated with REIT investing, the sector has come under intense pressure lately. The rising interest rate environment has been unforgiving, especially for REITs.
As REITs tend to be highly leveraged, they have to pay much more on their borrowings – which will only drive down their dividend payouts. At the same time, REITs have to compete with fixed-income investments that are offering much more attractive payouts. For example, the latest 6-months T-bills are paying 4.07% p.a., while S-REITs have an average dividend yield of 7.5% p.a.
Persistently high inflation and rising geopolitical tensions have also led to an increasingly tense and unpredictable business landscape. Many REITs also have to contend with developments in their individual segments. Office REITs are seeing their tenants shrink with work-from-home becoming a reality, retail REITs are competing much harder with e-commerce, and REITs are also having to manage tenant defaults and higher operational costs due to inflation.
Read Also: Treasury Bills (T-bills): What Are They And How You Can Buy Them
How Singapore REITs Have Performed In 2023 So Far
With a combined market capitalisation of $96 billion, Singapore is the largest REIT market in Asia (ex-Japan). The 42 REITs and property trusts listed on the SGX also account for 12% of Singapore’s stock market.
Due to the challenging operating environment, there have not been many new REIT listings in Singapore. The last REIT IPO came in 2021, with Digital Core REIT. Even though Digital Core REIT is a pure-play data centre REIT, its unit price has fallen close to 40% since its listing – from US$0.88 to US$0.53 today.
Looking at the chart below, we can see that the overall S-REIT market has fallen nearly 7.5% since the start of the year.
Source: SGX
We can compare the performance of S-REITs to the overall Singapore market, as well as the global REIT market, to see how well or poorly it has held up.
The Straits Times Index (STI), made up of the 30 strongest stocks in Singapore, has dipped only about 1.0% since the start of 2023. Meanwhile, the S&P Global REIT, comprised of over 400 REITs from 26 countries, has plunged over 6.9% in 2023.
This means, S-REITs have fared much more poorly than the overall Singapore markets. Even when compared to global REITs, it has been worse off.
How Individual S-REIT Have Performed In YTD 2023
| No. | REITs, Stapled Securities And Other Trusts, And ETFs | Price (SGD) | YTD Total Returns (%)* | Dividend Yield (%)* | ||
| REITs and Stapled Securities | ||||||
| Commercial/Office REITs | ||||||
| 1 | Cromwell European REIT (SGX: CWBU) | EUR 1.85 | 4.8 | 11.5 | ||
| 2 | Elite Commercial REIT (SGX: MXNU) | GBP 0.25 | -41.0 | 16.8 | ||
| 3 | IREIT Global (SGX: UD1U) | 0.395 | -15.3 | 10.2 | ||
| 4 | Keppel REIT (SGX: K71U) | 0.855 | 1.1 | 4.6 | ||
| 5 | Keppel Pacific Oak US REIT (SGX: CMOU) | USD 0.22 | -45.5 | N.M. | ||
| 6 | Manulife US REIT (SGX: BTOU) | USD 0.057 | -75.6 | N.M. | ||
| 7 | OUE Commercial REIT (SGX: TS0U) | 0.235 | -25.2 | 8.9 | ||
| 8 | Prime US REIT (SGX: OXMU) | USD 0.138 | -58.2 | N.M. | ||
| 9 | Suntec REIT (SGX: T82U) | 1.16 | -8.7 | 6.2 | ||
| Retail REITs | ||||||
| 10 | BHG Retail REIT (SGX: BMGU) | 0.485 | -8.6 | 1.7 | ||
| 11 | CapitaLand China Trust (SGX: AU8U) | 0.885 | -13.8 | 7.9 | ||
| 12 | Frasers Centrepoint Trust (SGX: J69U) | 2.19 | 9.7 | 5.5 | ||
| 13 | Lendlease Global Commercial REIT (SGX: JYEU) | 0.545 | -12.6 | 8.2 | ||
| 14 | Lippo Malls Indonesia Trust (SGX: D5IU) | 0.017 | -42.5 | 7.6 | ||
| 15 | Mapletree PanAsia Commercial Trust (SGX: N2IU) | 1.43 | -5.3 | 6.3 | ||
| 16 | Sasseur REIT (SGX: CRPU) | 0.675 | -3.2 | 9.4 | ||
| 17 | Paragon REIT (SGX: SK6U) | 0.835 | 4.5 | 5.8 | ||
| 18 | Starhill Global REIT (SGX: P40U) | 0.485 | -3.6 | 7.8 | ||
| 19 | United Hampshire US REIT (SGX: ODBU) | USD 0.43 | 4.5 | 13.7 | ||
| Integrated REIT (Retail + Commercial) | ||||||
| 20 | CapitaLand Integrated Commercial Trust (SGX: C38U) | 1.85 | -1.3 | 5.6 | ||
| Industrial REITs | ||||||
| 21 | AIMS APAC REIT (SGX: O5RU) | 1.30 | 7.8 | 7.9 | ||
| 22 | CapitaLand Ascendas REIT (SGX: A17U) | 2.75 | 6.9 | 5.6 | ||
| 23 | Daiwa House Logistics Trust | 0.555 | 0.6 | 9.8 | ||
| 24 | Digital Core REIT | 0.53 | 8.0 | 6.9 | ||
| 25 | EC World REIT (SGX: BWCU) | 0.28 | -35.7 | 14.4 | ||
| 26 | ESR-LOGOS REIT (SGX: J91U) | 0.28 | -8.8 | 9.4 | ||
| 27 | Frasers Logistics & Commercial Trust (SGX: BUOU) | 1.07 | 6.3 | 6.1 | ||
| 28 | Keppel DC REIT (SGX: AJBU) | 2.08 | 30.4 | 4.6 | ||
| 29 | Mapletree Industrial Trust (SGX: ME8U) | 2.26 | 8.2 | 5.9 | ||
| 30 | Mapletree Logistics Trust (SGX: M44U) | 1.68 | 9.9 | 5.4 | ||
| 31 | Sabana Industrial REIT (SGX: M1GU) | 039 | -6.1 | 8.1 | ||
| Hospitality REITs | ||||||
| 32 | ARA US Hospitality Trust (SGX: XZL) | USD 0.29 | 0.4 | 9.8 | ||
| 33 | CapitaLand Ascott Trust (SGX: HMN) | 0.96 | -2.5 | 6.3 | ||
| 34 | CDL Hospitality Trust (SGX: J85) | 1.04 | -13.5 | 5.9 | ||
| 35 | Far East Hospitality Trust (SGX: Q5T) | 0.635 | 8.5 | 5.7 | ||
| 36 | Frasers Hospitality Trust (SGX: ACV) | 0.505 | 9.6 | 4.6 | ||
| Healthcare REITs | ||||||
| 37 | First REIT (SGX: AW9U) | 0.23 | 5.4 | 10.0 | ||
| 38 | ParkwayLife REIT (SGX: C2PU) | 3.69 | 5.9 | 3.8 | ||
| Other Property Trusts | ||||||
| 39 | CapitaLand India Trust (SGX: CY6U) | 1.05 | 10.4 | 6.3 | ||
| 40 | Dasin Retail Trust (SGX: CEDU) | 0.068 | -72.3 | N.A. | ||
| REIT ETFs | ||||||
| 41 | Lion-Phillip S-REIT ETF (SGX: CLR) | 0.845 | -6.7** | 5.8 | ||
| 42 | NikkoAM-Straits Trading Asia Ex Japan REIT ETF (SGX: CFA) | 0.809 | -12.6** | 6.0 | ||
| 43 | Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ) | 1.019 | -10.7** | 4.4 | ||
| 44 | CSOP iEdge S REIT Leaders ETF (SGX: SRT) | 0.779 | -7.1** | 7.3 | ||
| 45 | UOB Asia Pacific (APAC) Green REIT ETF (SGX: GRN) | 0.709 | -9.7** | 2.1 | ||
Price (SGD) is based on 29 September 2023 at the time of writing, with the currency in SGD unless otherwise stated
*YTD Total Returns and Dividend Yield derived from SGX SREITs & Property Trusts Chartbook – September 2023
**YTD Total Returns for REIT ETF derived from individual factsheets, using 1-year returns
Read Also: How Singapore REITs Performed In 2022 (& Will They Bounce Back In 2023)?
3 Best Performing S-REITs in YTD 2023
#1 Keppel DC REIT (30.4%)
#2 CapitaLand India (10.4%)
#3 Mapletree Logistics Trust (9.9%)
We can see that 2 of the 3 best-performing REITs are within sectors that we expect to perform well – Data Centres (with Keppel DC REIT) and Logistics (with Mapletree Logistics Trust). CapitaLand India is also exposed to one of the fastest-growing economies in the world today – India.
During the year, Keppel DC REIT grew its distributions per unit via acquisitions, positive rental escalation and tax savings. It maintained a portfolio occupancy of 98.5%, and has a long WALE of 8.0 years.
Capitaland India has been gradually expanding its property portfolio in five top-tier cities in India, including Mumbai, Bangalore, Chennai, Hyderabad and Pune. In 2023, it completed an acquisition of a tech park in Pune and increased leasing capacity at an existing property, it also announced a proposed acquisition in Bangalore.
Mapletree Logistics Trust has a healthy portfolio occupancy of 97.1%. It is also actively managing its property portfolio, with acquisitions in Japan, Korea and Australia and expansion in Malaysia. At the same time, it has also announced divestments in Malaysia, Japan and Singapore.
3 Worst Performing S-REITs in YTD 2023
#1 Manulife US REIT (-75.6%)
#2 Dasin Retail Trust (-72.3%)
#3 Prime US REIT (-58.2%)
Again, two of the three worst-performing REITs were US office REITs, which have come under intense pressure on the back of poorer occupancy and higher interest rates.
Dasin Retail Trust was issued a Trade with caution alert on 21 August 2023. This was on the back of unusual and aggressive trading activity seen following two notices of demand that Dasin Retail Trust received from the Bank of China and Maybank, also in August 2023.
Read Also: Complete Guide To Start Your REITs Investing Journey In Singapore
The post S-REITs Report Card 2023: How Singapore REITs Performed In 3rd Quarter 2023 appeared first on DollarsAndSense.sg.
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