5th June 2022.
- FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreased from 853.56 to 820.69 (-3.85%) compared to last month’s update. FTSE REIT Index is currently trading within the 800-822 range.
- Yield spread (in reference to the 10-year Singapore government bond of 2.82% as of 3rd June 2022) loosened slightly from 3.44% to 3.47%. The S-REIT Average Yield increased from 6.00% to 6.30%, but the increase in the Government Bond Yields offsets this Average S-REIT Yield increase. The yield of the REITs sector needs to increase to maintain the average yield spread of 4%. Amid all the negative news, S-REITs have been resilient and have one of the highest risk-adjusted dividend yields compared to other stock exchanges.
- The risk premium has dropped, but still remains attractive (compared to other asset classes) to accumulate Singapore REITs in stages to lock in the current price and to benefit from long-term yield after the recovery, especially since the S-REIT Market is still at a fair value. Moving forward, it is expected that DPU will continue to increase due to the recovery of the global economy, as seen in the previous few earning updates, especially for Hospitality REITs. NAV is expected to be adjusted upward due to revaluation of the portfolio.
Technical analysis
