COVID-19 has accelerated various mega-trends such as digital transformation, new consumer behaviours in the retail sector, and even the emergence of new business models. With Singapore’s (and the global) economic recovery gradually unfolding, the second quarter of 2021 saw an improved performance for REITs compared to the previous quarter.
The 42 Singapore-listed REITs maintained a high combined market capitalisation of $114 billion across 7 sub-segments – industrial, hospitality, diversified, retail, office, specialised, and health care. S-REITs have one of the highest distribution yields, averaging 5.8%, as compared to other asset classes, including the STI index at 3.0%.
Coupled with low volatility, at approximately 12% 90D volatility of iEdge S-REIT Index, Singapore REITs can be seen as a sound investment decision.
How Singapore REITs Performed In 2nd Quarter 2021
To get a broad overview of how Singapore REITs have done in the second quarter of 2021, we look at how the iEdge S-REIT Leaders Index – measuring the performance of the most liquid REITs listed on the SGX in Singapore dollars – has performed.
The iEdge S-REIT Leaders Index declined by about 0.7% from approximately $1,400 on 1 April 2021 to $1,390 on 30 June 2021. This decrease is much lower than that of the STI, which decreased by approximately 1.6% from $3,181 on 1 April 2021 to $3,130 on 30 June 2021. This showed that S-REITs performed better than STI. The iEdge S-REIT Leaders Index was also relatively stable and experienced low volatility with their lowest price at approximately $1,326 and their highest price at $1,423, with a range of less than $100.
However, by looking at the S&P Global REIT Index, we can tell that S-REITs have underperformed global peers. The S&P Global REIT Index has risen 8.0% in the second quarter from US$189 on 1 April 2021 to US$205 on 30 June 2021 which is more than 10 times the increase that iEdge S-REIT experienced.
Source: S&P Global REIT Index
How Did Individual S-REITs Perform In 2nd Quarter 2021?
|No.||All REITs, Stapled Securities And Other Trusts, And ETFs||Price (SGD)*||Forward Distribution Yield (%)||YTD Total Returns (%)***|
|REITs and Stapled Securities|
|1||Cromwell European REIT (EUR) (SGX: CNNU)||2.510||6.8||9.2|
|2||Elite Commercial REIT (UK) (SGX: MXNU)||0.680||7.7||7.6|
|3||IREIT Global (SGX: UD1U)||0.650||7.1||6.3|
|4||Keppel REIT (SGX: K71U)||1.140||5.2||10.7|
|5||Keppel Pacific Oak US REIT (USD) (SGX: CMOU)||0.745||8.5||19.6|
|6||Manulife US REIT (USD) (SGX: BTOU)||0.765||7.1||5.8|
|7||OUE Commercial REIT (SGX: TS0U)||0.415||5.9||17.2|
|8||Prime US REIT (SGX: OXMU)||0.845||7.9||15.2|
|9||Suntec REIT (SGX: T82U)||1.450||5.7||2.2|
|10||BHG Retail REIT (SGX: BMGU)||0.585||3.8||8.5|
|11||CapitaLand Retail China Trust (SGX: AU8U)||1.310||6.5||1.2|
|12||Frasers Centrepoint Trust (SGX: J69U)||2.380||5.0||0.7|
|13||Lendlease Global Commercial REIT (SGX: JYEU)||0.885||5.3||23.4|
|14||Lippo Malls Indonesia Trust (SGX: D5IU)||0.063||5.4||3.5|
|15||Mapletree Commercial Trust (SGX: N2IU)||2.090||4.5||4.0|
|16||Mapletree North Asia Commercial Trust (SGX: RW0U)||1.010||6.5||7.3|
|17||Sasseur REIT (SGX: CRPU)||0.950||7.1||20.7|
|18||SPH REIT (SGX: SK6U)||0.890||5.7||13.0|
|19||Starhill Global REIT (SGX: P40U)||0.600||13.2||27.2|
|20||United Hampshire US REIT (SGX: ODBU)||0.745||8.2||14.1|
|Integrated REIT (Retail + Commercial)|
|21||CapitaLand Integrated Commercial Trust (SGX: C38U)||2.130||4.9||0.3|
|22||AIMS APAC REIT (SGX: O5RU)||1.540||5.8||31.1|
|23||Ascendas REIT (SGX: A17U)||3.090||5.0||7.3|
|24||ARA Logos Logistics Trust (SGX: K2LU)||0.895||5.7||56.8|
|25||EC World REIT (SGX: BWCU)||0.820||7.5||18.5|
|26||ESR-REIT (SGX: J91U)||0.455||6.8||18.5|
|27||Frasers Logistics & Commercial Trust (SGX: BUOU)||1.510||5.0||11.8|
|28||Keppel DC REIT (SGX: AJBU)||2.540||3.9||(4.5)|
|29||Mapletree Industrial Trust (SGX: ME8U)||2.920||4.6||7.4|
|30||Mapletree Logistics Trust (SGX: M44U)||2.090||4.1||8.0|
|31||Sabana REIT (SGX: M1GU)||0.440||6.7||34.3|
|32||ARA US Hospitality Trust (SGX: XZL)||0.510||NIL||22.7|
|33||Ascott Residence Trust (SGX: HMN)||1.010||4.1||(2.8)|
|34||CDL Hospitality Trust (SGX: J85)||1.180||2.1||(2.0)|
|35||Far East Hospitality Trust (SGX: Q5T)||0.580||3.8||(4.2)|
|36||Frasers Hospitality Trust (SGX: ACV)||0.520||0.7||(1.6)|
|37||First REIT (SGX: AW9U)||0.260||19.7||29.6|
|38||Parkway Life REIT (SGX: C2PU)||4.780||2.9||22.0|
|Other Property Trusts|
|39||Ascendas India Trust (SGX: CY6U)||1.420||5.9||8.0|
|40||Dasin Retail Trust (SGX: CEDU)||0.520||11.5||(35.2)|
|43||Lion-Phillip S-REIT ETF (SGX: CLR)||1.106||4.3 **||5.33**|
|44||NikkoAM-Straits Trading Asia Ex Japan REIT ETF (SGX: CFA)||1.140||13.0 **||3.14**|
|45||Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ)||1.437||5.1 **||4.34**|
*Price (SGD) is based on 16 August 2021 opening price, with the currency in SGD unless otherwise stated
**Forward Distribution Yield and YTD Total Returns for REIT ETF is based on Dividend Indicated Gross Yield from Bloomberg and YTD Total Returns from Bloomberg respectively
***YTD Total Returns data as of 30 July 2021 from SGX’ SREITs & Property Trusts Chartbook – August 2021
3 Best Performing S-REITs
#1 ARA LOGOS Logistics Trust (46.8%)
#2 Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (34.3%)
#3 First Real Estate Investment Trust (29.6%)
The 3 best performing S-REITs in the 2Q2021 were from different sectors, with ARA LOGOS Logistics Trust from the industrial property space. ARA LOGOS Logistics Trust and ARA US Hospitality Trust were also among the 3 best performing S-REITs in the 1Q2021.
ARA LOGOS Logistics Trust’s significantly high return can be attributed to its higher revenue generated from their recent acquisitions, the commencement of new leases, and even higher recoveries from DHL Supply Chain Advanced Regional Centre.
Sabana Shari’ah Compliant Industrial Real Estate Investment Trust attributed their improved performance in 1H2021 to their refreshed strategy which aimed to actively manage and optimise portfolio, divest non-performing and mature assets, and undertake AEIs (Asset Enhancement Initiatives).
First REIT’s distinct growth strategy allowed them to perform well. By acquiring yield-accretive properties in the healthcare and healthcare-related industry which fulfils its investment criteria, First REIT continues growing within and outside Asia.
3 Worst Performing S-REITs
#1 Dasin Retail Trust (-35.2%)
#2 Keppel DC REIT (-4.5%)
#3 Far East Hospitality Trust (-4.2%)
Dasin Retail Trust remains as the worst performing S-REITs with YTD returns dropping by 35.2%.
With surging worldwide investment in data centres, it is probably unexpected for Keppel DC REIT to be in one of the 3 worst performing S-REITs. One explanation is that previous quarters of optimism and investor’s high expectation of the REIT’s performance is leveling off. Furthermore, the expansion of mandate with their proposed investment in M1’s network assets diverges from their current portfolio with AUM of $3.1 billion in 19 data centres.
As a hospitality trust, Far East Hospitality Trust was hit hard by the pandemic. However, with the upward trending vaccination rates in major economies that could result in the resumption of travel arrangements in months ahead, the tourism sector may be poised for recovery.
3 REITS With Best Distribution Yield
#1 First REIT (19.7%)
#2 Starhill Global REIT (13.2%)
#3 Dasin Retail Trust (11.5%)
Although their high distribution yield could make these REITs tempting, investment decisions should be exercised with caution. It is important to note that this could be temporary and even an indication of the company’s bad financial performance (i.e. a plunge in share price will push up distribution yield).
First REIT has the best distribution yield and also comes in second for the best performing S-REITs. This could be an indication of stabilising after being hit by negative announcements previously.
On the other hand, Dasin also featured as one of the worst performing S-REITs in 2021, this potentially highlights some red flags. In addition, their 38.5% increase in revenue from 1H2020 to 1H2021 was mainly due to contributions from recent acquisitions rather than improving business. Dasin Retail Trust’s consistent decline in their share prices from 73 cents in 1 April 2021 to their all-time low of 48 cents in 15 July 2021.
Although Starhill Global REIT has a higher distribution yield than Dasin Retail Trust, their share price has been showing an upward trend. Their resilient operational performance with overall occupancy of 96.7% and prudent capital management allowed them to maintain a stable portfolio valuation at S$2.96 billion as at 30 June 2021.
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