What is/are Singapore's best REITs in 2019? And why? - Seedly

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Asked by Thaddeus Tan

Asked on 23 Apr 2019

What is/are Singapore's best REITs in 2019? And why?

The 20 best answers will win a ticket to the REITs Symposium 2019!

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Victor Wong
Victor Wong

()

Level 3. Wonderkid
Updated on 06 May 2019

Frasers Centerpoint Trust.

It has an annualised return of 9.5%~.

Over the last 10 years, Frasers Centrepoint Trust has grown its distribution per unit from 7.51 cents to 12.015 cents, up by 60%, giving investors a compounded annual growth rate of 5.4%.

As of the end of 2018, Frasers Centrepoint Trust had a relative low gearing ratio of 28.8%, one of the lowest among singapore reits. Its weighted average term to maturity is 1.8 years, and the all-in cost of borrowing is at 2.7%. Due to its low gearing ratio and cost of borrowing, Frasers Centrepoint Trust will have a good position, from a growth perspective, in the long run.

Frasers Centrepoint Trust has price-to-book ratio of 1.1, suggesting a low valuation, and distribution yields of 5.2%

It has 6 shopping malls across singapore with 3 acquisitions. Most of its revenue comes from Causeway Point, Changi City Point and Northpoint City after the renovations. All these shopping malls are located next to a MRT station, while being well maintained and managed, it will continue to prosper.

more information at: https://www.fool.sg/2019/02/21/better-buy-capitaland-mall-trust-or-frasers-centrepoint-trust-part-1/

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Cheryl Teng Sze Hui
Cheryl Teng Sze Hui

()

Level 3. Wonderkid
Answered on 26 Apr 2019

SPH REIT would be the one I will keep my eyes on as they have been delivering consistently good performance since last year.

Paragon and Clementi Mall continue to see positive rental reversions. SPH reits maintained an occupancy rate of 99.2 per cent, and the overall portfolio registered a positive rental reversion of 8.4 per cent for the first half.

Contributions from their 2 major acquisitions The Rail Mall in Singapore and Figtree Grove Shopping Centre in Australia, both also boosted their numbers in the second quarter. Believe they will continue to generate growth opportunities for SPH REITs, driving DPUs to another record.

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Yeow Min Quan
Yeow Min Quan

()

Level 2. Rookie
Updated on 24 Apr 2019

The best REITS in 2019 will depend on which industry you are looking at or interested in. It also depends on the financial metric you are looking out for. Are you looking at yield or ROE etc.

In my opinion, the best REITs in Singapore in 2019 would be the Industrial sector given that the demand for warehousing and data centre is likely to rise due to e-commerce and the need for large data centre to store servers for companies.

In particular, EC World REIT would be a good choice since its yield is relatively high at 8.02% and their diversified portfolio consists of income-producing real estate which is used primarily for e-commerce, supply-chain management and logistics purposes. They also have a main focus in China which is expected to have strong demand for warehouse. (https://www.dbs.com.sg/treasures/aics/templatedata/article/industry/data/en/GR/072016/china_warehouse.xml)

The China's government is also implementing a stimulus programme to drive economic growth in China (https://www.cnbc.com/2019/03/05/chinese-premier-li-keqiang-on-tax-cuts-monetary-stimulus-in-china.html) which is expected to drive overall economic activity.

Looking at the financial and valuation side, its relatively low PE ratio (0.886) also means that it is currently undervalued and there's an upside for price increase. It also has a strong balance sheet and free cash flow which can support any potential economic downturn should it happen.

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2

I'm gonna shed a slightly different perspective.

I believe Singapore focus retail REITS will do best due to:

  1. Singapore has one of the best performing REITS market in the whole world
  2. A small island living 5.71 millions of people and set to grow more. Other than traveling overseas, there no where to go on weekday/end for food and entertainment other than nearby malls.
  3. We can't be traveling every weekday / end, we're literally trapped! Where can we go ? JB Jam like mad on weekend / school holiday! Newest mall like Jewel just a hype. Once hype is over everything will go back to Location, Location, Location again!
  4. Reaserch also shows that Singaporean or those living in Singapore likes to go to mall rather than just online shopping/food delivery. I believe it is not just to see/sense touch and buy things, but for food, services and entertainment as human always wants fresh air (or free Aircond! :P) / variety and a change of environment.
  5. We liverally grow up with Malls / Shopping centre, we cannot live without. I personally grow up with malls in Orchard and other heartlands since i'm a boy. Can one find a singaporean who has never been to a mall for more than 30 times in his / her whole life ?

Thus my choice is; SGX: CAPITALAND MALL TRUST REIT (SGX:C38U)

The financial analysis shown by seedly on : https://blog.seedly.sg/review-reits-singapore-invest/?fbclid=IwAR3t3ptQ43Il-U2wwRSs6l0jMLcF2XQ6yYI1puxrr7HEa-bsHevbL9oS6GI is healthy, so I shall not repeat here.

With 15 properties worth $10.5 billion, including Bedok Mall, Bugis+ and Tampines Mall, which all in hearthland occupying mature estate with high populations, a mix of local and foreigners, where can people go for food, product, service and entertainment but these malls ?

Personally, my visit to Plaza Singapura, Tampines Mall and Bugis Junction for the past 10 years on weekday and weekend, I don't see any lack of patrons for food, product, services and entertainment. Management kept changing tenant mix and with AEI, it has done very well for all these malls.

There's maybe nearby malls as competitors , but variety and different choices is key. Each adjacent mall don't have the same tenant and the same offerings (but the same boring one only exist in malls of different zone (north , central, east and west)]. Bored! haha.

Even latest Changi's crown Jewel has almost everything, but it's located at extreme east. If I want something fast and easy and can get home in a short time without the crowd, I'll go nearby neighbourhood malls such as Bedok / tampinese mall rather than Jewel, I'll go jewel if I want something new / fresh / different or have the time to go but daily needs mostly heartland malls like the above would have suffices just nice.

Finally, E-Comm is here to stay. I personally get almost everything online, groceries and food. However, i still felt like going to malls on weekday or weekend to have a walk, see something different, consume some different food and services. Friends and family also visit malls for the similar reason.

At the end of the day, we still need to meet people face to face because we're not born to live and be alone, we need to communicate, hang out , eat, chat and entertain together and most of all, create memories on special occasions. We simply can't do these online!

Thus, my vote goes to our very home Capitaland Mall Trust REIT.

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Yong Yu Sian
Yong Yu Sian

()

Level 2. Rookie
Answered on 05 May 2019

Ascendas REIT. It is one of the largest diversified portfolio in the industry sector which mainly contains business and science parks, hi-specification industrials, light industrial and logistics. With the these sectors tightening, we can expect more growth from there. Also, it has acquired 26 premium logistics in Australia for 1 billion which contributes to 13.2% of A-REIT. With a yield of 5.43%, i think it is a very good REIT

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Vincent Lim
Vincent Lim

()

Level 2. Rookie
Answered on 04 May 2019

Definitely Mapletree REITs, as I work at Mapletree Business City.

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Darren Phua
Darren Phua

()

Level 2. Rookie
Answered on 23 Apr 2019

Capitaland and mapletree for stability and consistent growth!

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Alex Chua Cheng En
Alex Chua Cheng En, Pcme at Anderson Junior College

()

Level 4. Prodigy
Updated on 23 Apr 2019

Everyone has their ideal REITs. Other than earning your stable dividend payout, you would not want to lose money. There is no best REITs. There is only better REITs out of the choices available at that moment of time in your level of confidence.

The Reits can be good fundamentally, just that it is sold at a premium value or too pricely. What is measured as decent by most are:

-growing dpu (distribution per unit)

  • gearing ratio

-interest coverage

-balanced weighted average lease expiry

-good management team.

Spoilt with choices or in a dilemma, you can build a better or more balanced Reits with a portfolio of good REITs u understood. This could potentially reduce unnecessary risk and reduce money loss

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Rave Ong Ci De
Rave Ong Ci De

()

Level 5. Genius
Answered on 23 Apr 2019

There is no best REITs because different REITs get affected by different industry factors.

For retail REITs, the occupancy rate differs from say an industrial REITs. The retail REITs would need anchor tenants who in turn, would attract other tenants to join, e.g. Think A&W and Pokemon Centre at Jewel, which attracted other tenants to come in. Compared that to industrial REITs which would not need anchor tenants, but more on security features to stop unauthorised entries.

All REITs are affected by interest rates, due to their debts. So if US decides to increase the Fed interest rates, expect SG’s interest rate to go up. This in turn, would hurt all the REITs, unless they have all done some sort of interest rate swap/hedge. Even then, they would minimise the inpact and not eliminate it.

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1

Capital land, A-REITs and maple tree are the top performing with a planned portfolio which I believe is a key factor in sustained growth.

On another note you can also look at trusts

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Cheong Yuan Hoe
Cheong Yuan Hoe

()

Level 2. Rookie
Answered on 23 Apr 2019

There are no best REITs yet in 2019, as it will depend on the following informations for individual companies:

  • Distribution per Unit (DPU)
  • Funds From Operation (FFO)
  • Gearing Ratio
  • Interest Coverage
  • Occupancy Ratio
  • Weighted Average Lease Expiry

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Amos Ang
Amos Ang

()

Level 2. Rookie
Answered on 23 Apr 2019

The best REITs start with either a "Capita" or "Maple". Notice that if you employ this easy heuristic and simply buy when they are down, sure make money one!

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XiangRen Tan
XiangRen Tan

()

Level 2. Rookie
Answered on 23 Apr 2019

Ascendas Reit because of its share price increment in the first half of 2019. Moreover, with CapitaLand merger with Ascendas-Singbridge, Ascendas REIT might be privatized or merged with CapitaCom Trust. There are lots of possibilities in this reit and the dividend yield has been good over the years. It is one of the best performing reit in the Industrial sector with lots of business parks under its belt.

Hence, I nominate it as the best REIT in 2019!

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Yun Han Wong
Yun Han Wong

()

Level 1. Freshie
Answered on 05 May 2019

I think the term "best" is subjective and pretty much based on what investors are looking out for - are they investing for short term capital gains? or dividends? or long term capital appreciation?

Personally, I think "best" Reits are those that have a strong management team with the foresight to steer the trust in the right direction for long term growth and sustainability. I have a personal preference for industrial reits and the "newer" kinda reits like EC World reit that deals with the emerging ecommerce sector.

There are sooo much to learn about Reits and I am still pretty much a noob. So I really hope to get a ticket to the REITs Symposium 2019 then I can figure what are some of the best Reits out there!!! ;)

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Kimmy SJ
Kimmy SJ

()

Level 1. Freshie
Answered on 04 May 2019

I am at beginner stage, so I'd say Capitaland & Mapletree. I'd like to learn more during the session!

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Ng Wei En
Ng Wei En

()

Level 4. Prodigy
Answered on 04 May 2019

Am personally a fan of Mapletree REITs due to its superior organic growth in recent years as a result of excellent management. The best Mapletree REIT in my opinion Mapletree Commercial Trust(MCT) because of the following reasons:

1) Hybrid of both retail(Vivocity) and commercial(office spaces) sector

2) High occupancy rate( 99.4% in Vivocity and 97.8% in MBC, both of which forms the bulk of MCT)

3) Strong properties in MCT's flagship - Vivocity. Strategic location of Vivocity and its recent upgrade at B1 as well as as addition of public library at L3 will help increase shopper traffic

4) Healthy gearing ratio of 33.1% as at 31 Mar 2019

5) Minimal single tenant properties( Top 10 tenants contributed 25.5% of gross revenue, ranging from 2.0% to 3.7% of total gross rental revenue). This means that should a single tenant's lease be expired, the direct impact on the overall MCT portfolio is minimised.

6) Manageable lease expires( all leases have an average commited basis of 2.9 years(sufficient buffer over 2 years which is regarded as minimum for committed tenancy)

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Sheng Kang Peh
Sheng Kang Peh

()

Level 1. Freshie
Answered on 30 Apr 2019

I will say the best REIT in 2019 is Sasseur REIT, and it is on the rise as it manages factory outlet shopping malls in China. We are seeing a dividend yield has just been with close to 10% dividends for those who have bought earlier.

I feel that its VIP shopper base are increasing. Sasseur REIT has a unique rental agreement with an entrusted manager. In summary, the REIT employs a third-party manager to manage its properties and it earns a basic flat fee and a variable fee. The variable fee is dependent on tenant sales. As such, the REIT’s DPU ( distribution per unit ) is linked with the sales its tenants generate. As VIP members contribute around 50% of total sales for the REIT’s tenants, the higher number of members will likely drive tenant sales higher in 2019 and increase the variable rental component earned by Sasseur REIT.

Moreover, it has an affordable valuation and its low gearing and increasing shopper traffic also make it do well in the future.

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Lim Jing Yang Alex
Lim Jing Yang Alex

()

Level 1. Freshie
Answered on 26 Apr 2019

Hi all, just to share some views from a newbie. I'm personally vested in Fraser logistics trust and it's been doing great for me! I picked up FLT last November and it had grown tremendously. The REIT has a high number of freehold assets in western countries (Australia, Europe and etc.), great sponsors, rather long term tenants leases and last but not least, it's new! Being a young multinational REITs, I believe that the REIT still have a great growth potential ahead!

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ParkwayLife REIT

  1. Defensive sector

Hospital REIT, one of the most defensive sectors. Extremely rare to see hospitals vacate a building and move out. Also, very rare to see hospitals go bankrupt. Good times or bad times people who fall sick still need to see a doctor.

  1. Good Private Hospitals

Mount E and Gleneagles, enough said. Rich people go there.

  1. Country Diversification

They have presence in Malaysia and expanding themselves in Japan with nursing homes. With Japan's aging population, nursing homes have very good prospects for growth.

  1. No rights issue? (I think)

I can't seem to recall the last time parkwaylife asked retail shareholders for money.

  1. Steady DPU Growth

Consistent and steady increase in annual DPU !!

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To put in context, the Singapore's best REIT in 2019 to invest in, is a wonderful REIT that has the following qualities:

  • Strong Brand
  • Economic of Scale
  • Cash Income
  • Secure Financial Status
  • Strong Management Team

Currently looking at CapitaLand Limited (SGX:C31) as the wonderful REIT of choice. As attached and at this writing, price has came down to $3.53 and formed a bearish bar. I'll wait for the following setup before investing:

  • Price forms a decisive bullish bar
  • Price is above 50EMA (red line)
  • 50EMA is above 200EMA (green line)
  • Bullish cyclicity is intact

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