REITs have not had an easy time recently. Having just navigated the uncertainties of COVID-19, rising interest rates and a looming recession threaten any potential upturns in the sector.
REIT investors will be interested in the distribution per unit (DPU) of the REIT. Regardless of what the market does, if a REIT manages to increase its DPU, then it is a positive sign of growth and good management.
Accompanying distribution growth is price increases that we can potentially enjoy. As REITs grow their portfolio and distributions, we can also expect investors to favour them over other investments – leading to a rise in price.
We look at how S-REITs have performed, especially in these two regards. But first, let’s see how the over REIT market has done.
How Singapore REITs Have Performed In 2023 Year-To-Date
Singapore REITs have a combined market capitalisation of over $100 billion – which represents 12% of the local market. There are 42 REITs and property trusts listed on SGX, with 90% of them holding overseas assets. The average dividend yield of S-REITs is 7.6% (as of 31 March 2023).
Singapore REITs can be broken down into seven sectors: 1) Diversified REITs (23%); 2) Industrial REITs (20%); Retail REITs (20%); Office REITs (15%); Hospitality REITs (13%); Health Care REITs (5%); and Specialised REITs (5%).
In the chart below, we can see that REITs have been pummelled by rising interest rates in the last year. Zooming in on the recent 1st quarter 2023, S-REITs have delivered a return of 3.0% – albeit still depressed from last year’s levels.
In comparison, the overall Singapore market – represented by the Straits Times Index (STI) – fared slightly poorer, delivering a return of just 1.5% in the first quarter of 2023. The STI pays a dividend yield of 4.22% (as of 31 March 2023).
We can also compare the Singapore REIT market to global REITs. We can look at the S&P Global REIT, which is made up of at least 435 REITs listed in over 25 countries.
In the chart below, we can see that global REITs fared slightly poorer than Singapore REITs, delivering a return of just 0.23% in the year-to-date 2023. Global REITs pay a dividend yield of 4.49% (as of 31 March 2023).
Source: S&P Global REIT
|Investments||Price Performance in YTD 2023||Dividend Yield|
|Singapore REITs (S-REITs)||3.0%||7.6%|
|Straits Times Index (STI)||1.5%||4.2%|
How Individual REITs In Singapore Have Performed In YTD 2023
|No.||REITs, Stapled Securities And Other Trusts, And ETFs||Price (SGD)||YTD Total Returns (%)*|
|REITs and Stapled Securities|
|1||Cromwell European REIT (SGX: CWBU)||EUR 1.57||12.7|
|2||Elite Commercial REIT (SGX: MXNU)||GBP 0.410||3.6|
|3||IREIT Global (SGX: UD1U)||0.5||3.0|
|4||Keppel REIT (SGX: K71U)||0.91||4.7|
|5||Keppel Pacific Oak US REIT (SGX: CMOU)||USD 0.385||1.8|
|6||Manulife US REIT (SGX: BTOU)||USD 0.21||-3.1|
|7||OUE Commercial REIT (SGX: TS0U)||0.32||7.6|
|8||Prime US REIT (SGX: OXMU)||USD 0.310||5.4|
|9||Suntec REIT (SGX: T82U)||1.45||4.4|
|10||BHG Retail REIT (SGX: BMGU)||0.48||-3.0|
|11||CapitaLand China Trust (SGX: AU8U)||1.13||6.5|
|12||Frasers Centrepoint Trust (SGX: J69U)||2.29||7.1|
|13||Lendlease Global Commercial REIT (SGX: JYEU)||0.705||4.2|
|14||Lippo Malls Indonesia Trust (SGX: D5IU)||0.016||-10.0|
|15||Mapletree PanAsia Commercial Trust (SGX: N2IU)||1.81||4.4|
|16||Sasseur REIT (SGX: CRPU)||0.745||0.7|
|17||Paragon REIT (SGX: SK6U)||0.955||10.3|
|18||Starhill Global REIT (SGX: P40U)||0.525||7.0|
|19||United Hampshire US REIT (SGX: ODBU)||USD 0.465||11.8|
|Integrated REIT (Retail + Commercial)|
|20||CapitaLand Integrated Commercial Trust (SGX: C38U)||2.02||-2.4|
|21||AIMS APAC REIT (SGX: O5RU)||1.35||13.4|
|22||CapitaLand Ascendas REIT (SGX: A17U)||2.87||3.9|
|23||Daiwa House Logistics Trust||0.575||0.8|
|24||Digital Core REIT||0.455||14.4|
|25||EC World REIT (SGX: BWCU)||0.305||-9.0|
|26||ESR-LOGOS REIT (SGX: J91U)||0.33||-4.4|
|27||Frasers Logistics & Commercial Trust (SGX: BUOU)||1.3||9.5|
|28||Keppel DC REIT (SGX: AJBU)||2.08||14.7|
|29||Mapletree Industrial Trust (SGX: ME8U)||2.38||7.8|
|30||Mapletree Logistics Trust (SGX: M44U)||1.73||7.7|
|31||Sabana Industrial REIT (SGX: M1GU)||0.47||1.1|
|32||ARA US Hospitality Trust (SGX: XZL)||USD 0.360||14.3|
|33||CapitaLand Ascott Trust (SGX: HMN)||1.03||-1.9|
|34||CDL Hospitality Trust (SGX: J85)||1.2||4.4|
|35||Far East Hospitality Trust (SGX: Q5T)||0.605||4.4|
|36||Frasers Hospitality Trust (SGX: ACV)||0.475||5.6|
|37||First REIT (SGX: AW9U)||0.255||2.5|
|38||ParkwayLife REIT (SGX: C2PU)||3.99||16.4|
|Other Property Trusts|
|39||CapitaLand India Trust (SGX: CY6U)||1.09||2.6|
|40||Dasin Retail Trust (SGX: CEDU)||0.166||-22.8|
|41||Lion-Phillip S-REIT ETF (SGX: CLR)||0.937||-12.6**|
|42||NikkoAM-Straits Trading Asia Ex Japan REIT ETF (SGX: CFA)||0.916||-12.7**|
|43||Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ)||1.126||-17.3**|
|44||CSOP iEdge S REIT Leaders ETF (SGX: SRT)||0.875||-12.3**|
|45||UOB Asia Pacific (APAC) Green REIT ETF (SGX: GRN)||0.779||-16.1**|
Price (SGD) is based on 6 April 2023 at the time of writing, with the currency in SGD unless otherwise stated
*YTD Total Returns derived from SGX SREITs & Property Trusts Chartbook – March 2023 (data as of 28 Feb 2023)
**YTD Total Returns for REIT ETF derived from Fundsupermart
Prices are from SGX website, quoted in SGD unless otherwise stated.
CapitaLand Ascendas REIT was renamed from Ascendas REIT.
CapitaLand Ascott Trust was renamed from Ascott Residence Trust.
CapitaLand India Trust was renamed from Ascendas India Trust.
Paragon REIT was renamed from SPH REIT.
3 Best Performing S-REITs in 1Q 2023
#1 ParkwayLife REIT (16.4%)
#2 Keppel DC REIT (14.7%)
#3 ARA US Hospitality Trust (14.3%)
While all three REITs are from different sectors, the common theme among them is that they all reported growth in DPU in their latest financial results. The same cannot be said for many other REITs, combating the ongoing effects of COVID-19, rising interest rates, and economic uncertainties.
As the best-performing S-REIT, healthcare-focused ParkwayLife REIT achieved a total return of 16.4% in the first quarter of 2023. This comes on the back of a 2.1% increase in its FY2022 DPU. The higher DPU was delivered on the back of higher rents from its Japan Nursing Home properties acquired in 2021 and 2022, as well as higher rent from its Singapore Hospital property portfolio.
In the data centre space, Keppel DC REIT’s 14.7% total return was second best. In its FY2022, Keppel DC REIT delivered 3.7% higher DPU. This was achieved through its data centre acquisitions in Guangdong, China, London and The Netherlands. It also earned higher rents post-asset enhancements initiatives and the completion of a data centre in Australia.
ARA US Hospitality REIT suffered during COVID-19. With travel restarting, it has even acquired a new hotel property in Colorado Springs, US. For its FY2022, it paid a “proper” DPU, which was 7.6 times higher than what it paid out last year. This was because of significantly better revenue. While it stated that total hotel demand is still below pre-pandemic levels, higher average daily rates boosted the market.
3 Worst Performing S-REITs in 1Q 2023
#1 Dasin Retail Trust (-22.8%)
#2 Lippo Malls Indonesia Trust (-10.0%)
#3 EC World REIT (-9.0%)
The worst performing REITs all came from the retail segment – two of which are based in China and Lippo Malls in Indonesia. Another thing all of them had in common was a lack of distributions.
In its latest 1H2022 results, Dasin Retail Trust stated that it has “retained distribution income and deferred distribution for prudent cash flow and capital management in view of the continued uncertainties arising from the Covid-19 situation in China”.
Moreover, Dasin Retail Trust looks to be mired in various financial and operational challenges. A quick look at its SGX announcements details the receipt of a letter of demand due to its inability to top up its reserve account in relation to a loan facility. There also looks to be issues with its master lease arrangements and it has applied for an extension of time to release its FY2022 results, annual report and to hold its AGM.
Lippo Malls Indonesia Trust has its share of operational challenges. On 20 March 2023, it elected not to pay distributions on its perpetual securities, which have a dividend stopper provision that also means it does not provide any distributions to its unitholders.
Besides this, its auditors also have “material uncertainty related to going concern in their audit report” – to which it has released its response to. As at 31 December 2022, Lippo Malls Indonesia Trust’s current liability exceeds its current assets by over $72 million.
EC World REIT reduced its 4Q2022 distributions by nearly 60%. It also applied for waivers to hold its AGM and balance sheet audit. They also have been unable to complete a proposed divestment of certain assets, and have requested its lenders to provide an extension for its repayment deadline. EC World REIT itself has had its auditors highlight material uncertainty of its ability to continue as a going concern.
Note, these are simply some of the concerns we spotted by reviewing its recent announcements, and there may be even more that are not as recent.
3 S-REITs with Best Dividend Distribution Yield in 1Q 2023
#1 Manulife US REIT (18.4%)
#2 Prime US REIT (16.4%)
#3 Keppel Pacific Oak US REIT (13.0%)
A look at the line-up of REITs that pay the best dividend distribution already tells us that we should not simply invest for their returns.
It is very unlikely that REITs will pay out distribution yields in the teens. It is more likely that the market thinks that these REITs will not be able to sustain their distributions in the coming months.
Their high dividend yields is a result of their share price being beaten down severely. Manulife US REIT has fallen 69% in the past year, and is over 80% down from pre-COVID-19. Similarly, Prime US REIT has dropped 59% in the last year, and has dipped more than 70% since pre-COVID-19 highs. Keppel Pacific Oak US REIT has also fallen 48% and 52% in the last 1-year period and since pre-COVID-19 respectively.
We can also see that all three REITs are US office REITs. Even though the office buildings themselves may be high quality, they have had a difficult time with the work-from-home trend. In addition, there is also a trend of workers in the US moving from more popular locations to other parts – which also impacts the high-quality office properties in popular locations.
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