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Shopping For Value In Overseas REITs

shopping cartOf the many REITS listed on Singapore’s Stock Exchange, five, specifically, generate all their revenues through overseas operations.

Mapletree Greater China Commercial Trust (SGX: RW0U) which has been on the market for less than 18 months and CapitaRetail China Trust (SGX: AU8U) invest in Chinese real estate. Elsewhere, Fortune REIT (SGX: F25U) owns no fewer than 17 retail malls and properties in Hong Kong, while Lippo Malls Indonesia Retail Trust (SGX:D5IU) and Saizen REIT (SGX:  T8JU) own properties in Indonesia and Japan, respectively.

Typical of REITs, all five companies offer generous dividend yields, with Lippo Malls leading the way. It pays an 8% yield. However, the REIT’s Price-to-Earnings, at 13.9, might also be the least appealing. Whilst this does not sound outrageously high when compared to the overall market, the other REITS are valued at lower multiples.

With a market capitalisation of S$2.4 billion, Mapletree Greater China Commercial Trust is the largest of the five REITs. It is also the first and currently the only REIT that allows investors to invest in properties in Hong Kong and mainland China.

Recently, MGCCT reported a near double digit growth in both revenue and net income. With a PE of 6.8, which is around half the market average, and valued just below its Net Assets, the owner of Gateway Plaza in Beijing and Festival Walk in Kowloon could warrant a second look.

If you thought Mapletree’s results were impressive, Fortune REIT’s numbers are even better. The company said second-quarter revenues and income increased by over 30%.

Fortune REIT looks appealing given that it is valued at just 3.6 times earnings and priced at only 70% of its book value. A jump of around 27% in the income available for distribution also allows Fortune REIT to boast  a distribution yield of over 6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Adam Kuo doesn’t own shares in any companies mentioned.