The US Federal Reserve has indicated that 2019 will likely see slower interest rate hikes. This comes on the back of mounting macroeconomic uncertainties, that has seen investors turn to less risky investments.
This may benefit REITs in three ways:
# 1 Traditionally, REITs take on a lot of debt to fund its capital-intensive property investments. Slower interest rate hikes in 2019 will ease the growing pressure on REITs, in terms of debt repayment.
# 2 Markets are efficient – which means that prices of REITs would have taken into consideration that rate hikes would continue as normal. This stance of slowing down the interest rate hikes in 2019 is new information for the market, and may give REITs a boost. (Do note that most of this new information should already be priced into the markets today.)
# 3 As investors turn to less risky investments. REITs that are well-managed and have a portfolio of high-quality properties have a better chance of shielding investors from volatility in the markets, while still paying out relatively good distributions.
How REITs Performed In Year-To-Date 2019
Some of you may be confused why we’re talking about the year-to-date 2019 performance when we promised an FY2018 update in the headline. This is because most companies, including the listed REITs, have a financial year (FY) that ends on 31 December 2018. However, they’re only able to release their results for how they did in FY2018 a few months later (around the February to March) period. Therefore, any price reactions to their FY2018 results will only be captured a few months later.
To estimate how REITs have done in the year-to-date 2019, we can look to the two REIT indexes in Singapore. The first table depicts the iEdge S-REIT Index – which measures the performance of all Singapore REITs.
In the year-to-date 2019 (till 25 February 2019), the index rose 7.3%.
The second table below depicts the price movements of the biggest 20 REITs listed in Singapore during the same timeframe. Just by looking at it, we can tell that the price movements are relatively similar to the first table, which tracks all REITs listed in Singapore.
In the year-to-date 2019 (till 25 February 2019), the index rose 7.7%. This shows that the biggest REITs, which also tends to be the ones with better quality properties, bigger portfolio of properties and more established managers performed slightly better than the overall market.
Here’s how the individual Singapore REITs have done in the year-to-date 2019.
|No.||All REITs, Stapled Securities And Other Trusts||Industry (Country)||Price On 25 Feb 2019 (SGD)||Dividend Yield +||Return In YTD 2019 +|
|REITs and Stapled Securities|
|1||CapitaLand Commercial Trust||Commercial (Singapore)||$1.92||4.7%||12.3%|
|2||Cromwell European REIT (EUR)||Commercial (Denmark, France, Germany, Italy, and the Netherlands)||€0.505||8.5%||14.8%|
|3||Frasers Commercial Trust||Commercial (Singapore and Australia)||$1.49||6.6%||10.6%|
|4||IREIT Global||Commercial (Germany)||$0.77||N.A.||6.2%|
|5||Keppel REIT||Commercial (Singapore and Australia)||$1.24||4.6%||10.0%|
|6||Keppel-KBS US REIT (USD)||Commercial (USA)||US$0.665||8.9%||13.0%|
|7||Manulife REIT (USD)||Commercial (USA)||US$0.84||7.3%||13.0%|
|8||OUE Commercial REIT||Commercial (Singapore, China)||$0.50||6.8%||11.5%|
|9||Suntec REIT||Commercial and Retail (Singapore)||$1.92||5.2%||9.3%|
|10||BHG Retail REIT||Retail (China)||$0.70||N.A.||-2.1%|
|11||CapitaLand Mall Trust||Retail (Singapore)||$2.44||4.9%||8.7%|
|12||CapitaRetail China Trust||Retail (China)||$1.45||7.0%||10.2%|
|13||Fortune REIT (HKD)||Retail and Commercial (Hong Kong)||HK$9.89||5.4%||13.9%|
|14||Frasers Centrepoint Trust||Retail (Singapore)||$2.30||5.4%||7.4%|
|15||Lippo Malls Indonesia Trust||Retail (Indonesia)||$0.23||10.9%||26.4%|
|16||Mapletree Commercial Trust||Retail and Commercial (Singapore)||$1.79||5.1%||9.9%|
|17||Mapletree North Asia Commercial Trust||Retail and Commercial (China and Hong Kong)||$1.24||6.0%||10.5%|
|18||Sasseur REIT||Retail (China)||$0.77||8.3%||18.5%|
|19||SPH REIT||Retail (Singapore)||$1.03||5.5%||4.4%|
|20||Starhill Global REIT||Retail and Commercial (Singapore, Australia, Malaysia and others)||$0.70||6.7%||4.6%|
|21||AIMS AMP Capital Industrial Reit||Industrial (Singapore and Australia)||$1.38||7.5%||5.7%|
|22||Ascendas Reit||Industrial (Singapore, Australia and China)||$2.80||5.8%||8.9%|
|23||Cache Logistics Trust||Industrial (Singapore and Australia)||$0.72||8.1%||5.8%|
|24||EC World REIT||Logistics (China)||$0.755||8.5%||9.4%|
|26||Frasers Logistics & Industrial Trust||Logistics and Industrial (Australia)||$1.10||6.4%||6.8%|
|27||Keppel DC REIT||Data Centres (Diversified)||$1.47||5.4%||11.7%|
|28||Mapletree Industrial Trust||Industrial (Singapore)||$2.00||6.0%||7.2%|
|29||Mapletree Logistics Trust||Logistics and Industrial (Singapore, Japan, Hong Kong and others)||$1.40||5.6%||12.8%|
|30||Sabana REIT||Industrial (Singapore)||$0.425||N.A.||10.8%|
|31||Soilbuild Business Space REIT||Industrial (Singapore)||$0.595||8.6%||5.1%|
|32||Ascendas Hospitality Trust||Hospitality (Australia, Japan, Singapore and China)||$0.85||6.8%||10.4%|
|33||Ascott Residence Trust||Hospitality (Japan, China, Singapore and others)||$1.15||6.2%||10.1%|
|34||CDL Hospitality Trust||Hospitality (Singapore, Australia, Maldives, New Zealand, Japan, United Kingdom)||$1.60||6.0%||12.9%|
|35||Far East Hospitality Trust||Hospitality and Commercial (Singapore)||$0.64||6.6%||7.4%|
|36||Frasers Hospitality Trust||Hospitality (Singapore, UK, Japan, Australia and Germany)||$0.73||6.6%||4.3%|
|37||OUE Hospitality Trust||Hospitality (Singapore)||$0.72||7.1%||9.4%|
|38||First REIT||Healthcare (Indonesia)||$1.06||8.3%||9.9%|
|39||Parkway Life REIT||Healthcare (Singapore and Japan)||$2.84||4.6%||9.3%|
|Other Property Trusts|
|40||Accordia Golf Trust||Golf Courses (Japan)||$0.60||6.6%||18.8%|
|41||Ascendas India Trust||Industrial (India)||$1.16||6.0%||7.4%|
|42||Dasin Retail Trust||Retail (China)||$0.88||8.8%||1.7%|
|43||Hutchison Port Holdings Trust||Port Assets (Hong Kong and China)||US$0.235||8.1%||0.2%|
|44||Keppel Infrastructure Trust||Infrastructure (Singapore)||$0.505||7.7%||6.0%|
|45||RHT Health Trust||Healthcare (India)||$0.014||N.A.||54.2%|
|REIT ETFs ++|
|46||Lion-Phillip S-REIT ETF||ETF||$1.04||4.1%||9.2%|
|47||NikkoAM-Straits Trading Asia Ex Japan REIT ETF1||ETF||$1.19||4.6%||9.4%|
|48||Phillip SGX APAC Dividend Leaders REIT ETF||ETF||$1.42||3.7%||9.7%|
+ Based on OCBC Investment Research Indications
++ From Bloomberg Markets
Will There Be Another REIT Listing Soon?
It is also interesting to note that the last REIT to list on the SGX – Sasseur REIT – did so almost a year ago on 26 March 2018. No other REIT has listed on SGX since then.
While this could be a sign of some weakness in the REIT market, it may have been a case of new REIT IPOs were waiting for a better time following the increased market volatility in 2018 and the beginning of 2019.
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