Singapore-listed real estate investment trusts (REITs) have paid out a whopping S$2.9 billion in total dividends over the last 12 months, according to the latest data from Singapore Exchange’s investor education portal SGX My Gateway.
Although REIT prices have taken a bit of a knock recently, analysts say they remain upbeat on the long-term investment prospects of SGX-listed REITs.
In the last 12 months, CapitaMall Trust has distributed a total of S$343 million in dividends.
It is the highest amount of income distribution by a Singapore REIT out of the 22 REITs that were listed before this year.
There have been three more REIT listings this year — they are Mapletree Greater China Commercial, SPH REIT and Soilbuild Business Space REIT.
Overall, the 25 REITs listed on SGX have a combined market capitalisation of S$52.7 billion.
The five largest REITs in term of market capitalisation accounts for almost half of the total dividend distribution.
The REITs are CapitaMall Trust, Ascendas REIT, Suntec REIT, CapitaCommercial Trust and Keppel REIT.
The market cap of REITs is about one-tenth that of STI stocks, but their total dividend is about one-fifth that of STI companies. This means that REITs generate better yields than STI stocks on a dividend basis.
Including dividends, the average total return of the 22 REITs listed before 2013 was 7.5 percent, compared to the total return of the 30 STI stocks, which was 7.4 percent over the same period.
IG Singapore markets strategist Kelly Teoh said: “The risk on assets and the risky assets have generally, on a global scale, done really well and will continue to outperform because of the liquidity. So if you look at that from that perspective, you’ve got to look at the equity class.”
The US Quantitative Easing measures have injected more liquidity in the markets. But in June this year, concerns about QE tapering has caused REITs to plummet.
Analysts expect QE tapering to cause interest rates to rise, making bonds a more attractive investment than REITs.
OCBC Investment Research analyst Eli Lee said: “The issue of tapering is likely to come to the forefront again sometime later this year and early next year. If that happens, prices of REITs will be volatile.
“For the REITs sector, we have a neutral rating, which means that we expect the sector to perform in line with the STI over the next 12 months.”
The performance of Singapore REITs can also be tracked by the FTSE ST REIT Index, which is made up of 32 constituents including both REITs and business trusts.
According to SGX My Gateway, the annualised total return for the ST REIT Index is 11.83 percent since 2010, compared to the annualised total return of the STI which is 6.04 percent for the same period.
Source : Channel NewsAsia – 6 Nov 2013