There are many ways to find investment insights. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue. Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they…
There are many ways to find investment insights. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.
Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.
In this article, I will look at three Singapore REITs that have seen the highest net disposal in dollar value by institutional investors for the week ended 28 December 2018. They are Ascendas Real Estate Investment Trust (SGX: A17U), CapitaLand Commercial Trust (SGX: C61U) and Mapletree Logistics Trust (SGX: M44U).
Source: Singapore Exchange; SGX Stock Facts
The first Singapore REIT that saw its shares sold off by institutional investors is Ascendas REIT. As a quick introduction, Ascendas REIT owns properties that are used for either commercial or industrial purposes or both. It has properties in Singapore, Australia, and United Kingdom.
In the latest quarter ended 30 September 2018, Ascendas REIT reported that gross revenue improved as compared to the same period last year (up 1.1%) due to new acquisitions in Australia and UK. On the other hand, distribution per unit (DPU) declined 4.2% mainly due to an increase in the number of share units. As of 30 September 2018, the REIT’s gearing stood at 33.2% while its committed occupancy rate stood at 90.6%.
Mr William Tay, Chief Executive Officer and Executive Director of the Manager commented:
“We had a very active quarter and made significant progress in expanding into the UK. We also raised equity in anticipation of the second UK portfolio acquisition which was completed in October 2018. Besides Singapore, our long term strategy is to build up our portfolio in Australia, the UK and also into Europe.”
The next Singaporean REIT that saw its shares sold off by institutions recently is Capitaland Commercial Trust or CCT.
As a quick introduction, CCT is one of the largest commercial real estate investment trusts (REITs) in Singapore by market capitalization that is managed by CapitaLand Limited (SGX: C31). The REIT has ownership over nine commercial properties in Singapore and one property in Germany.
In the latest quarter ended 30 September 2018, CCT reported that all financial metrics are stronger than those of last year. The year-on-year improvement in gross revenue and net property income (NPI) was “due to the strategic acquisitions of Asia Square Tower 2 and Gallileo, partially offset by the divestments of Wilkie Edge and Twenty Anson1.” As at 30 September 2018, the commercial REIT clocked in a gearing ratio of 35.3% while its occupancy rate stood at 99.2%.
In all, CapitaLand Commercial Trust had a good quarter with stronger metrics across the board.
The last Singapore REIT with significant net selling by institutional investors is Mapletree Logistics Trust or MLT.
As a quick introduction, MLT is a real estate investment trust (REIT) that owns 139 logistics properties around Asia-Pacific region that includes Singapore, Hong Kong, Japan, China, South Korea, Australia and others.
Similar to CCT, MLT reported a solid quarter with strong numbers. Let’s look at some numbers below.
In the latest quarter ended 30 September 2018, MLT reported that gross revenue grew 13.8% year-on-year to S$ 106.6 million while net property income (NPI) improved by 14.6% during the period to S$ 90.2 million. Also, distribution per unit (DPU) was up by 3.8% year-on-year to 1.958 cents. The stronger performance was mainly driven by growth from the existing portfolio as well as contributions from two acquisitions in Hong Kong.
Ms Ng Kiat, Chief Executive Officer of MLT’s manager, commented:
“Over the past 12 months, we have gained significant momentum in our portfolio rejuvenation and recycling efforts, thereby increasing the proportion of modern-specs properties in MLT’s portfolio, especially in our core markets with growth potential. We will continue to build on this momentum to future-proof our portfolio.”
Overall, the performance was solid, especially when the 3.8% year-on-year growth in DPU was achieved despite an increase in shares from 2.5 billion last year to 3.2 billion this year.
Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment insights. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.
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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for CapitaLand Commercial Trust and Ascendas Real Estate Investment Trust.