Singapore’s Office REITs: Here’re the Best Performers

The Singapore stock market boasts of 30 real estate investment trusts (REITs).

The REITs can be organised by industry. Office REITs, as defined by the Global Industry Classification Standard (GICS), is one sector which makes up Singapore’s REIT universe. A recent report, which covers 27 REITs, provided some insight into the Office REITs. Here’re some highlights from the report (figures as of 30 May 2016, unless otherwise stated):

  1. Frasers Commercial Trust (SGX: ND8U) is the best performing office REIT over the past three years. The REIT recorded a total gain of 1.4% over the period. Frasers Commercial Trust trades at a price to book (P/B) ratio of 0.8 and has a distribution yield of 7.8%. The REIT has a market capitalisation of a little over $1 billion.
  2. The $4.2 billion CapitaLand Commercial Trust (SGX: C61U) weighs in at second place with a total return of 0.9% over the past three years. The REIT, which is also a component of the Straits Times Index (SGX: ^STI)trades at a P/B ratio of 0.8 and offers a 6.1% distribution yield.
  3. When it comes to distribution yields, IREIT Global (SGX: UD1U) comes out tops with an 8.4% yield. The REIT, which had its initial public offering (IPO) in August 2014, is trading below its IPO price but still has a P/B ratio of 1.1.
  4. Not all office REITs have a positive performance over the last three years. For instance, Keppel REIT (SGX: K17U) has recorded a negative 6.2% in total returns over the period. The REIT has a trailing distribution yield of 6.5% and trades at a P/B ratio of 0.7.

Looking back helps us understand how the REITs have fared over the past three years and gives us clues on the ones that might be worth following. This may give us a head-start on our investing homework that follows.

It could be important as well to note that Singapore is expected to have a record supply of Grade A office space entering the market this year. This may lead to near-term pressure on rental rates for Office REITs that are exposed to the Singapore office market.

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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 Chin Hui Leong doesn't own shares in any company mentioned.