Book value discount for S-REITs narrows amid global interest rate outlook

The FTSE Straits Times REIT Index  has seen its total return fall by 10% this year, while the FTSE EPRA Nareit Developed Countries Index (the global REITs benchmark) has fallen by 22%, as global inflation outstrips global growth by 5% in 2022.

The FTSE Straits Times REIT Index was trading at a discount of 7% to book value, up from a 16% discount a month earlier (Data as of Nov 18).

The most defensive REITs and real estate business trusts year-to-date include CDL HTrust $CDL HTrust (J85.SG)$ Far East HTrust $Far East HTrust (Q5T.SG)$ , Sabana Reit $Sabana Reit (M1GU.SG)$ , CapitaLand Mall Trust $CapLand IntCom T (C38U.SG)$ , and Suntec Reit $Suntec Reit (T82U.SG)$ .

Sabana Reit $Sabana Reit (M1GU.SG)$ , CapitaLand Mall Trust $CapLand IntCom T (C38U.SG)$ and CDL Hospitality Trust $CDL HTrust (J85.SG)$ were among the top five trusts with the highest year-to-date net inflows to the current market capitalization ratio.

The FTSE Straits Times REIT Index recorded a total return of 12.0% in the past month amidst a slight slowdown in hawkish interest rate hikes expected in the US.

Overall, the five S-REITs that recorded the highest net inflows this year included CapitaLand Mall Trust $CapLand IntCom T (C38U.SG)$ , Sabana Reit $Sabana Reit (M1GU.SG)$ , CapitaLand Ascott Trust $CapLand Ascott Trust (HMN.SG)$ , CDL HTrust $CDL HTrust (J85.SG)$  and Fraser Hospitality Trust $FRASERS HOSPITALITY TRUST (ACV.SG)$ , with an average total return of 2.3%.

Over the same period, the five S-REITs that recorded the highest net outflows included Mapletree Industrial Trust $Mapletree Ind Tr (ME8U.SG)$ , Keppel DC REIT $Keppel DC Reit (AJBU.SG)$ , Mapletree PanAsia Commercial Trust $Mapletree PanAsia Com Tr (N2IU.SG)$ , CapitaLand Ascendas REIT $CapLand Ascendas REIT (A17U.SG)$ and Mapletree Logistics Trust $Mapletree Log Tr (M44U.SG)$, with total returns fell by an average of 10.1%.

Source: SGX