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The Most Important Blue-Chip REITs in The Singapore Stock Market

Some companies in Singapore hold more sway than others. But a handful of companies may be influential enough be a part of Singapore’s Straits Times Index (SGX: ^STI).

The STI is often seen as a barometer for Singapore’s stock market. The index is made up from 30 of the largest listed companies in Singapore. These companies come from a variety of industries and sectors. The real estate investment trust (REIT) industry, in particular, is a well-established sector in Singapore.

The Lion City’s stock market is home to some 36 REITs and business trusts, making it one of the largest markets for property-related trusts. With that in mind, let’s have a look at three REITs that are part of the STI (data as of the end of August 2018):

1. Ascendas Real Estate Investment Trust (SGX: A17U) is the largest REIT listed on the Singapore market with a market capitalization of S$7.7 billion. Ascendas REIT is an owner and manager of 132 industrial properties located in Singapore, UK and Australia. The REIT’s sponsor is Ascendas-Singbridge, an urban and business space solutions provider with assets under management (AUM) worth S$20 billion. Ascendas has a 2.3% weightage on the STI index making it the largest REIT holding on the index. The past three years has seen Ascendas REIT deliver a total return of 47.8% for unit holders. The REIT offers a distribution yield of 6.1% today, and trades at a price to book (PB) ratio of 1.2.

2. CapitaLand Mall Trust (SGX:C38U) is the next largest REIT constituent on the index with a 1.8% weightage. CapitaLand Mall Trust has a presence in most neighbourhoods in Singapore with a total of 16 malls around our city state. The REIT’s sponsor, CapitaLand Ltd (SGX:C31), is one of the largest real estate companies in Asia. Capitaland Mall Trust is also the second largest REIT on the Singapore market with a market capitalisation of S$7.4 billion. The REIT delivered a respectable total return of 29.2% over the last three years. At current prices, CapitaLand Mall Trust provides a distribution yield of 5.2% while its PB ratio comes in at 1.1.

3. The third and final REIT on the index is CapitaLand Commercial Trust (SGX:C61U). The REIT focuses on the commercial property market, playing host to nine commercial properties in Singapore and one in Germany. Like CapitaLand Mall Trust, CapitaLand Commercial Trust’s sponsor is also Capitaland. The commercial REIT weighs in with a 1.5% weightage on the STI. Over the past three years, CapitaLand Commercial Trust has delivered a staggering 60.4% to investors. The REIT trades at a market capitalisation of S$6.6 billion currently, and sports a distribution yield of 4.9%. Units trade at 1 time its book value.

Collectively, the three REITs represent less than 6% of the STI’s weightage. As it stands, the REIT sector does not hold as much sway as the banking sector or the telco sector, but that could change in the future. There are five REITs, namely Suntec Real Estate Investment Trust (SGX: T82U), Mapletree Commercial Trust (SGX:N2IU), Keppel REIT (SGX: K71U), Mapletree Logistics Trust (SGX: M44U), and Mapletree Industrial Trust (SGX: ME8U) waiting on the wings to enter the STI.

As such, it is possible that the REIT sector will become increasingly important in the future.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay owns shares in CapitaLand Mall Trust and Mapletree Commercial Trust.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of CapitaLand Mall Trust, CapitaLand Commercial Trust, Mapletree Commercial Trust and Mapletree Industrial Trust. Motley Fool Singapore writer Chin Hui Leong owns shares in CapitaLand Mall Trust, Suntec REIT and Mapletree Logistics Trust.