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COVID-19 Investing: How Have REIT ETFs In Singapore Been Faring In 2020?

Take a guess on much you would have made or lost if you bought into an ETF that tracked SGX-listed REITs.


One common argument many REIT investors have is that regardless of whether prices go up or down, they will continue to receive a distribution yield – which they can reinvest or use as part of their retirement income.

As the economic fallout from COVID-19 has shown, there can be extreme scenarios where those who are over-reliant on REITs or have over-leveraged themselves to purchase REITs may be in for a rude shock. Not only have prices dipped by as much as 50% and more for some REITs, the ability to collect rent and continue paying a distribution has been severely impacted.

While it’s true that no one could have planned for COVID-19, the concept of a black swan event impacting our portfolio is relatively well-known. Arguably, it has happened many times in history – with the a couple of the latest being the Global Financial Crisis in 2008, and the Dot-Com bubble in 2000.

How Has COVID-19 Impacted REIT Prices In Singapore?

There are over 45 REITs listed on the Singapore Exchange (SGX), which itself is the only STI stock still positive for the year. There are a further thee REIT ETFs in Singapore – Phillip SGX APAC Dividend Leaders REIT ETF, NikkoAM-Straits Trading Asia Ex Japan REIT ETF, Lion-Phillip S-REIT ETF.

According to SGX, the REITs sector has plunged close to 22% since the start of the year, and at its lowest point, it has declined as much as 34%.

Read Also: S-REIT Report Card: Here’s How Singapore REITs Performed In First Quarter 2020

Source: SGX (iEdge S-REIT Index)

DollarsAndSense publishes a quarterly REITs report card column detailing how individual REITs have performed, but as you can see from the chart above, a lot can change in just a few days or weeks in the stock market right now.

How Have REIT ETFs Fared?

Firstly, we should note that ETFs are listed funds that pool together the funds of smaller individual investors to invest in assets that track a specific index.

As such, there are several benefits to investors, namely high liquidity since it can be traded on the stock exchange, allows diversification into numerous underlying assets with just a small amount of money, and offers a passive investment since there are no active managers buying or selling assets.

Read Also: Investing in REIT ETFs Listed In Singapore: 5 Things You Need To Know

As stated, these are the three REIT ETFs listed in Singapore.

No REIT ETFs Price Today
(Price At Start Of 2020)
Price Change In 2020
1 Phillip SGX APAC Dividend Leaders REIT ETF $1.087
($1.489)
-27%
2 NikkoAM-Straits Trading Asia Ex Japan REIT ETF $1.004
($1.254)
-20%
3 Lion-Phillip S-REIT ETF (SGX: CLR) $0.915
($1.164)
-21%

Source: Bloomberg

As we can see, the REIT ETFs performance was fairly close to how the iEdge S-REIT Index fared. This is because many of the constituents in the REIT ETFs are Singapore-listed REITs as well.

While the returns of REIT ETFs may not be any better than how Singapore REITs performed, we should not think that it doesn’t provide any benefit. As our investments are diversified, we do not take the risk of picking the wrong REIT, or benefit from picking the right REIT.

How Individual REITs Have Performed In 2020

As Singapore is a REIT hub, there are as many as 47 REITs and property-related business trusts on SGX today, with several owning assets entirely outside of Singapore. Here’s how the best and worst REITs have performed.

10 Worst Performing REITs In Singapore

No REITs Price Today
(Price At Start Of 2020)
Price Change In 2020
1 Eagle Hospitality Trust US$0.137
(US$0.55)
-75%
2 ARA US Hospitality Trust US$0.375
(US$0.87)
-57%
3 Lippo Malls Trust $0.103
($0.23)
-55%
4 ESR-REIT $0.28
($0.53)
-47%
5 CDL Hospitality Trust $0.89
($1.62)
-45%
6 Lendlease REIT $0.535
($0.93)
-42%
7 Sabana REIT $0.28
($0.46)
-39%
8 Starhill Global REIT $0.455
($0.73)
-38%
9 Far East Hospitality Trust $0.46
($0.74)
-38%
10 Ascott Trust $0.855
($1.33)
-36%

Source: Bloomberg

If we had decided to invest in individual REITs on our own, rather than one of the REIT ETF, we could be a lot worst off if we picked any one of the top 10 worst performing REIT. Among these REITs, there are also strong names such as Ascott Trust, Far East Hospitality Trust and CDL Hospitality Trust.

Some of the other names may be smaller REITs, but they typically tend to offer better yields (and hence higher risk) for investors.

On the other hand, we could have done better by picking some of the top 10 best performing REITs.

Read Also: Complete Guide To Start Your REITs Investing Journey In Singapore

10 Best Performing REITs In Singapore

No REITs Price Today
(Price At Start Of 2020)
Price Change In 2020
1 Keppel DC REIT $2.35
($2.08)
13%
2 Mapletree Logistics Trust $1.72
($1.74)
-1%
3 Dasin Retail Trust $0.795
($0.84)
-5%
4 Ascendas REIT $2.79
($2.97)
-6%
5 Parkway Life REIT $3.32
($3.11)
-6%
6 Mapletree Industrial Trust $2.60
($2.40)
-8%
7 EC World REIT $0.62
($0.75)
-17%
8 CapitaLand Retail China Trust $1.31
($1.61)
-19%
9 IREIT Global $0.64
($0.81)
-21%
10 Frasers Commercial Trust $1.30
($1.66)
-22%

Source: Bloomberg

The only REIT that has managed a positive share price gain in 2020 is Keppel DC REIT. One good reason is the need for data storage during COVID-19.

We can also see the strongest performing REITs tend to be those that are supported by strong sponsors. Interestingly, three China-focused REITs – Dasin Retail Trust, EC World REIT and CapitaLand Retail China Trust – made the top 10 list. Two of these China-focused REITs are also retail-focused.

We can also see that IREIT Global and Frasers Commercial Trust returned -21% and -22% respectively, which is close to what the REIT ETFs returned. This means if we picked the other 37 REITs, we may have been worst off than just investing in the REIT ETF. This is also because REIT ETFs tend to comprise bigger and more liquid REITs as well.

Read Also: Syfe REIT+: Why This Newest Robo-Advisory Product Is A Great Way To Get Started On Your REITs Portfolio

* All figures in this article are accurate as at 9 April 2020.

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