The Singapore stock market boasts of 30 real estate investment trusts (REITs).
Singapore’s REITs can be organised by industry. Hotel & Resort REITs, as defined by the Global Industry Classification Standard (GICS), is one which makes up part of Singapore’s REIT universe. A recent report, which covers 27 REITs, provided some insight into Hotel & Resort REITs. Here’re some highlights from the report (figures as of 30 May 2016, unless otherwise stated):
- Unfortunately, none of the Hotel & Resort REITs in the report generated a positive total return over the last three years. CDL Hospitality Trust (SGX: J85), with a market capitalisation of $1.4 billion, ranks as the largest Hotel & Resort REIT within the group. The stapled trust recorded a negative total gain of 10.8% over the period. CDL Hospitality Trust trades at a price to book (P/B) ratio of 0.9 and has a distribution yield of 7.6%.
- Meanwhile, Frasers Hospitality Trust (SGX: ACV), with a market cap of $1.1 billion, is trading below its initial public offering (IPO) price. The stapled trust, which debuted in mid-2014, is trading at 0.9 times its book value and offers a 7.8% distribution yield.
- When it comes to distribution yields, Ascendas Hospitality Trust Management (SGX: Q1P) comes out tops with an 8.3% yield. The stapled trust, which has a market cap of $739 million, has a negative total return of 12.2% over the past three years. It has a P/B ratio of 0.9.
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’s also worth noting that the Hotel & Resort REIT industry may have to face some tough operating conditions this year. In its last quarter, CDL Hospitality Trust noted that demand for hotels in Singapore might be weak in 2016 yet hotel supply is expected to go up 6.5%.
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.