Where Is The Value In Singapore’s Industrial REITs?

question mark man wonderingIndustrial REITs own and manage industrial properties including warehouses, distribution centres and manufacturing centres. They also account for no fewer than seven of Singapore’s listed REITs.

Despite the seven industrial REITs boasting a higher average yield than their retail counterparts at close to 7%, they might not necessarily represent better value. This is reflected by their higher earnings multiple of 11 compared with less than six time earnings for the retail REITs.

There are also only two industrial REITs that are trading below their book value. In both cases, even this can only be described as marginal.

The first of these companies is Sabana Shariah Compliant Industrial REIT (SGX: M1GU), the world’s largest Shariah compliant real estate investment trust.

With the highest dividend yield of all the industrial REITs at 7.3% and a price to book ratio of 0.95, Sabana at first glance might appear to be good value. However, it also has a fairly high PE of over 12. It also recently announced a fall in its net property income and its distributable income.

The second Industrial REIT trading below its book value is AIMS AMP Capital Industrial REIT (SGX: O5RU). It trading at a 9% discount to its Net Asset Value (NAV). It has a healthy dividend yield of 7.1% and it also has a more appealing earnings multiple of 9.5. That make it looks slightly better than Sabana but still not great.

Unlike Sabana though, AIMS has seen growth in its top and bottom lines. This could perhaps make AIMS AMP Capital Industrial REIT a slightly better option of the two. But still, neither appears quite as good value when compared to the retail REITs.

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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.