2016年6月23日星期四

CapitaLand Mall Trust’s Annual Report: 11 Numbers Investors Should Know






By Hui Leong Chin - June 1, 2016

CapitaLand Mall Trust  (SGX: C38U), an owner of multiple retail malls in Singapore, had released its latest 2015 annual report a few months back.

The annual report is a great place to learn more about the REIT. CapitaLand Mall Trust’s report contained a list of interesting numbers. Here are 11 numbers that may be worth knowing for investors:

At the end of 2015, CapitaLand Mall Trust had 16 properties and a whopping 3,086  leases. In comparison, its peer Frasers Centrepoint Trust (SGX: J69U), another REIT which owns retail malls in Singapore, had less than 700 tenant leases.
The annual shopper traffic to CapitaLand Mall Trust’s portfolio of malls is 348 million. This is impressive, given Singapore’s population of around 5.5 million people.
CapitaLand Mall Trust’s tenant retention rate was 81.1% in 2015. This suggests that the REIT has been able to maintain a strong relationship with its tenants.
The REIT also noted that no single tenant contributed more than 4.0% of its total gross rental income as at 31 December 2015. In fact, the 10 largest tenants accounted for under 20% of the REIT’s total gross rental income.
CapitaLand Mall Trust added that around 75% of its gross revenue caters to the necessity shopping segment. This may add resilience to the REIT’s portfolio during downturns.
The REIT’s loyalty programme, CAPITASTAR, boasts over 2.6 million members across five countries. There are more than 800,000 members in Singapore.
Moving on to debt, CapitaLand Mall Trust’s average term to maturity of its borrowings is 5.3 years. This is an increase compared to the 2.3 years to 4.7 years that were seen from 2011 to 2014. The REIT’s average cost of debt has also been relatively stable, hovering between 3.3% and 3.5%. In short, CapitaLand Mall Trust has been able to lengthen its debt term without incurring higher cost of debt.
A full 100% of CapitaLand Mall Trust’s debt is also unencumbered. Said another way, the REIT has not had to put up its assets as collateral when it borrows money. This is a major change from 2012, when only 50.4% of its debt was unencumbered.

2016年6月22日星期三

Broker's Report RHB likes Singapore retail and hospitality REITs; neutral on office

SINGAPORE (June 22): RHB is maintaining its “neutral” stance on the office sub-sector of Singapore REITs as it expects spot rents to fall further.

According to Knight Frank, premium Grade A+ office rents (Marina Bay/Raffles area) fell 3.6% q-o-q during 2Q16 to $9.88 psf from $10.25 psf in the previous quarter. The latest drop also marks the fifth consecutive q-o-q drop since the recent peak in 1Q15 at $11.49 psf.

The fall in office rents in the Marina Bay/Raffles area doesn't come as a surprise as the office sector has been grappling with supply glut issue since early 2015, says analyst Vijay Natarajan of RHB in a Wednesday note.

“We expect the supply-demand dynamics to remain unfavourable in the near-term as an average about 2 million sf  of office space is expected to be completed in the next three years compared to 10-year average demand of 1.2 million sf,” says Natarajan.

However, the office REITs sector currently trades at a high FY16 dividend yield of 6-7%, which would provide support to its share price.

Still, Natarajan likes the resilient local retail sub-sector as rental positive reversions are likely to persist. It also likes the hospitality sub-sector as there is an increasing number of new events in 2016.

“Our top picks are Ascendas REIT (Buy, Target price: $2.63),CapitaLand Mall Trust (Buy, Target price: $2.36), Frasers Centrepoint Trust (Buy, Target price: $2.22) and OUE Hospitality Trusts (Buy, Target price: $0.86),” says Natarajan.

2016年6月8日星期三

5 Important Factors You Need to Consider Before You Invest in Any REIT



If you’re looking for passive income, then investing in stocks that pay you a stable and growing dividend is something that you need to keep your eye open for. In that vein, REITs are great investments if you plan to invest for stable, passive income. Why so?
  • Firstly, REITs (or real estate investment trusts), as their name suggests, invest in real estate. And in land-scarce Singapore, property in general makes for a great long-term investment. Our country is also safe, politically stable, and well run (although some of us would disagree!) which means the value of our real estate is likely to hold and appreciate over time. And although many of our REITs also invest in assets overseas, most of them own properties that are mainly located in Singapore.
  • Secondly, REITs pay a high dividend yield. There are currently 35 REITs listed in Singapore with an average dividend yield of 7.5% (as at Feb 2016). With the current market downturn, some REITs have yields as high as 10% right now! One of the main reasons why REITs offer such high yields is because they enjoy tax-exempt status as long they pay out at least 90% of taxable income to shareholders. The tax breaks and high payouts mean higher yields for investors. The recent 2015 Singapore budget extended tax breaks for REITs for another five years.
  • Thirdly, REITs also pay their dividends (or distributions) four times a year. In comparison, a typical company usually only pays dividends once or twice a year. So if you’re an investor who wants to receive a steady, regular stream of passive income throughout the entire year, REITs will do very well for you.
So now that we’ve established that REITs offer a high, steady stream of passive income for investors, what are the important factors you need to look at before you invest in any particular REIT?
Here are five important factors you need to consider:

#1 Type of Industry

Not all REITs are made the same. Singapore REITs fall into six broad categories: office, retail, residential, healthcare, hospitality, and industrial. Each sector has its own specific characteristics that will affect a REIT’s growth, risk profile, and performance.
For example, office REITs like CapitaCommercial Trust, own office buildings. During a bull economy, businesses do well and demand for office space is high. This translates to higher rents and property income for the REIT. During a recession, the chips fall the other way – some businesses go bust, demand tumbles and office rents fall in tandem. The economic cycle largely affects the performance of an office REIT.
On the other hand, retail REITs like Starhill Global own shopping malls. Even in times of recession, many malls are usually still packed with shoppers and shop spaces are fully tenanted. Demand for retail space remains high which means rents and property income for the REIT barely drop.
Starhill Global SG Retail Occupancy Rate
All things equal, investing in a retail REIT is less volatile than investing in an office REIT. Of course, investors are aware of this and hence generally willing to pay higher prices for a retail REIT which lowers your dividend yield.

#2 Dividend Yield

This is probably the first ratio that every investor looks for when investing for dividends. While everyone enjoys a high dividend yield, what’s more important is to examine a REIT’s dividend track record.
Does a REIT pay a stable or rising dividend per share (or distributions per unit) year after year? Or does it tend to fluctuate every year?
A REIT that’s able to steadily grow its income and dividend per share year after year is understandably a more attractive investment than a REIT whose dividend payouts fluctuate all the time.
ParkwayLife REIT DPU 2007-2015
A REIT with a higher dividend yield doesn’t necessarily mean that it’s a “better” investment. For example, an office REIT usually has higher yields compared to a retail REIT, but office REITs are also more volatile and less resilient than retail REITs.

#3 Property Yield

Property yield is the amount of income a REIT can generate from a property. For example, if a property is worth 10 million dollars and earns $400K in rent in one year, then its property yield is 4%. Understandably, the higher the yield, the better. But what’s more important is to examine whether a REIT’s property yield is stable or rising over the years. A well-managed REIT will look for ways to continually improve its property yield.
SPH REIT Property Yield
Source: SPH REIT
One common way for a REIT to improve its property yield is to acquire yield-accretive properties. For example, if a REIT’s property yield is 4% and it acquires a new property that generates a 5% yield, the new acquisition will help to increase the REIT’s overall property yield.

#4 Gearing Ratio

Gearing ratio represents a REIT’s amount of debt over its total assets. The higher the ratio, the more debt a REIT has.
In Singapore, REITs are tightly regulated and only allowed to borrow up to 45% of their total assets. So if a REIT owns a billion dollars in assets, it can only borrow up to $450 million in loans. A REIT can borrow the money to fund new acquisitions for growth, upgrade its buildings, etc.
MCT Gearing 2011-2015
The lower the gearing ratio, the more conservative a REIT is. At the same time, a high gearing ratio does not necessarily mean that a REIT is a poor investment – it just means that a REIT is willing to take on more debt (and risk) for growth.

#5 P/B Ratio

P/B ratio measures a REIT’s share price against its net asset value (NAV) per share. Theoretically, a P/B ratio of 1 indicates a fair valuation. A ratio above 1 means a REIT is overvalued and a ratio below 1 means it is undervalued.
For example, if a REIT’s share price is $1 and its NAV per share is $2, then its P/B is 0.5 – essentially you’re only paying 50 cents for every dollar of net assets.
CMT PB Ratio
In practice though, you shouldn’t simply rely on P/B alone to value a REIT. Other important factors, like the ones we’ve discussed above and more, must also be taken into consideration when choosing to invest in a REIT.
While REITs in general are great investments for dividends, not all REITs are equal – it’s important to pick only the best-managed REITs that are able to pay you a long-term growing dividend and appreciate in value over time.
SG REIT Yield
Singapore REITs Historical Yield. Source: DBS Bank

Finally, if you’re a REIT investor and you’d like a quick way to view and compare all the above ratios at one glance, check out our free Singapore REIT data service where we list all this data and information for investors.

2016年6月1日星期三

星加坡房託2016Q1表現總覽

PUBLISHED MAY 31, 2016 Straits Times
S-Reits hit by weaker market conditions

Challenging market conditions have hit Singapore-listed real estate investment trusts (S-Reits), say analysts.

While S-Reits are still a favourite of investors here as they consistently outperform the Straits Times Index (STI), 27 Reits and six stapled trusts listed here reported an average distribution per unit (DPU) growth of 1.8 per cent in the first quarter, according to a press release by SGX yesterday.

The list excludes recently listed Manulife Reit, Fortune Reit which reports earnings on a half-yearly basis, as well as Saizen Reit.
This is the first time SGX has collaborated with the Reit Association of Singapore to track the quarterly performance of S-Reits.

But similar data available from OCBC investment research showed that the average DPU of 22 Reits came in at -0.9 per cent on a year-on-year basis for the first quarter ended March 31, compared with positive year-on-year growth of 1.9 per cent for the quarter ended December last year.

Analysts unanimously agreed that S-Reits performances had slowed.
Mr Soong Tuck Yin, executive director and head of property research, Asia at Macquarie Securities, said that the results were "within our expectations of a slower growth environment".
"S-Reits will be bracing themselves for slower growth, coupled with some margin pressures, particularly in the industrial sector. All sectors face their own challenges, but on a relative basis, we think suburban retail will do better, followed by office Reits."
The S-Reits which posted the highest total returns in the year to date were office landlord Keppel Reit, which reported 15.4 per cent returns, while Mapletree Commercial Trust, which counts VivoCity and Merrill Lynch Harbourfront in its portfolio, and Mapletree Greater China Commercial Trust reported 12.1 per cent and 10.7 per cent respectively.According to the SGX release yesterday, iREIT Global, which owns German offices, posted strongest year-on-year DPU growth at 43.6 per cent, while OUE Commercial Reit reported year-on-year DPU growth of 33.3 per cent.
RHB research investment analyst Ivan Looi said that despite slower performance, he would still consider Reits to be choice picks.
"There are still some bright spots that investors can get exposed to, such as retail and hospitality Reits. We like the retail sub-sector for its unbeatable resilience. We are also encouraged by the Reit tenants' sales and shopper traffic growth in the latest quarter. For hospitality, tourist arrival numbers have been encouraging, increasing 13.8 per cent year on year for the first quarter of this year."
But Mr Derek Tan, an analyst at DBS, cautioned that the outlook for S-Reits remains muted as most landlords are expected to "turn on the defensive, with a focus on maintaining occupancies and foregoing rental growth".
"We expect Reits to continue pursuing an overseas expansion strategy to diversify (their) earnings base and to seek higher growth. Countries of interest include Australia, Japan and China, which are driven by lower interest rates."