2015 Review For The Singapore Stock Market: Real Estate Investment Trusts

We are nearing the end of 2015. For many investors in Singapore, it has been a year of pain and hardship.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the Straits Times Index (SGX: ^STI), has seen its net asset value per unit fall 14% from S$3.408 at the end of December 2014 to S$2.93 as at 28 December 2015.

How have stocks in different segments of the market fared this year? Let’s have a look at major real estate investment trusts (REITs) listed in Singapore to find out the biggest winners and losers for 2015 in that space.

The lowdown on REITs

REITs in general have not had a great year as they have been haunted by lingering fears of how an interest rate hike might impact their financing costs in the future. A few weeks ago, the U.S. Federal Reserve finally increased benchmark interest rates in the country by 0.25%, the first time rates have been raised in nearly a decade.

For this review, I’d look at the stock market performance of Ascendas Real Estate Investment Trust (SGX: A17U)CapitaLand Mall Trust (SGX: C38U)SuntecReal Estate Investment Trust  (SGX: T82U)Frasers Centrepoint Trust (SGX: J69U), and Starhill Global Real Estate Investment Trust (SGX: P40U).

They are some of the biggest REITs in Singapore by market capitalisation; each currently has a market cap of at least S$1.6 billion. You can see their total returns (inclusive of reinvested dividends) from 1 January 2015 to 29 December 2015 in the graph below:

Source: S&P Capital IQ

Frasers Centrepoint Trust tops the group – but its total return of 2.5% is meagre. The trust’s net property income for the fiscal year ended 30 September 2015 had grown, clocking an 11% increase to $131 million. Frasers Centrepoint Trust also increased its distribution per unit for the year to 11.608 cents, up 3.8% from a year ago.

Suntec REIT suffered the greatest loss this year, declining by 15.3% in value. Suntec REIT has the majority of the debt on its books coming due soon in 2018 and 2019 and has already seen its cost of debt creeping upwards. It may be worth checking in on Suntec REIT to see how it plans to refinance its borrowings when they come due over the next few years.

Foolish Summary

Although the stock market performance of stocks or trusts over a single year is often too short to fully reflect their fundamentals, it is still interesting to note the wide difference in performance between companies or trusts that are operating in a similar space.

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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 writer Stanley Lim does not own any shares in the companies mentioned above.