Singapore’s Cheapest REITs

If you had listened to the naysayers last year, you could be forgiven in thinking that Singapore’s Real Estate Investment Trusts were about to disappear into oblivion.

Nothing of the kind happened.

Naturally, some S-REITs were affected by adverse economic conditions. In particular, hospitality REITs bore the brunt of a slowdown in spending by tourists in Singapore.

Of the nine REITs that reported lower distributions – yes, just nine out of 31 – five were notably from the hospitality sector. They included Far East Hospitality Trust (SGX: Q5T), CDL Hospitality Trust (SGX: J85) and OUE Hospitality Trust (SGX: SK7).

On the whole, S-REITs managed to hike their distributions by around 4%. Some managed to increase them by much more. SPH REIT (SGX: SK6U) increased its payout by 17%, while Fraser Commercial Trust (SGX: ND8U) paid out 15% more in 2015 than in 2014.

While some sense of normality has now returned to the Real Estate Investment Trust sector, the recovery has not been uniformly felt. Although a third of S-REITs are now trading above their book value, there are many that are valued significantly below their Net Asset Value.

Although the price-to-book value is not a perfect gauge, it can be a useful starting point to look for bargains.

Fortune REIT (SGX: F25U) is valued at a 35% discount to book, while Ascott Residence Trust (SGX: A68U) is trading at a Price-to-Book of 0.64. Others with low price-to-book valuations include Suntec REIT (SGX: T82U) and Mapletree Greater China Trust (SGX: WW0U).

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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 Director David Kuo doesn’t own shares in any companies mentioned.