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The Best-Of-The-Best Value Singapore REITs

Singapore_skyline_night_1Having looked at Singapore’s REITs by sector, the next logical step is to play off the best REITs in each group against each other to find Singapore’s best-of-the-best value REITs.

Value investors look for companies that meet certain stringent criteria. These include lower than average price-to-earnings ratio and an attractive price relative to book. A good value company should also have an above-average dividend yield. Additionally, it should have little or no debt.

Of all the Singapore-listed REITs how many ticks all the required boxes?

Since debt is an almost unavoidable part of REITs’ make up, we can relax the debt criterion and focus on the other three measures of value.

Of the 26 listed REITs, six manage to fulfil the first three criteria. These six are Ascott Residence Trust (SGX: A68U), Perennial China Retail Trust (SGX: N9LU), Keppel REIT (SGX: K71U), Frasers Commercial Trust (SGX: ND8U), Fortune Real Estate Investment Trust (SGX: F25U) and Mapletree Greater China Commercial Trust (SGX: RW0U).

Fortune and Frasers were two of the better looking amongst the Retail REITs. And with a price-to-earnings ratio of just 4.3, Fortune REIT appears to be the best value investment on this measure alone.

In terms of dividend yields, neither Fortune nor Fraser offer the best yield. Lippo Malls Indonesia Retail Trust (SGX: D5IU) with a yield of 7.8% is the best in class. However, Ascendas Hospitality Trust and Sabana REIT are not far behind, with yields of 7.4%.

Finally, the Holy Grail of value investing, namely the price-to-book ratio. Coming out trumps is Fortune REIT, which is priced at more than 30% discount to its book value. It is followed closely by Perennial China which has a price-to-book ratio of 0.73.

So, with an ultra-low PE ratio of 4.3; a dividend yield of 5.8% and a price-to-book of 0.66, Hong Kong-focussed, Fortune REIT, could be the current best-of-the-best value REIT in Singapore.

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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.