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Singapore REITs Screener
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Download my S-REIT screener from my Google Drive for free. You do not need to give me any of your personal information.
I update the screener regularly. It is in an Excel format and it looks like this:
I share investing insights every Friday that you shouldn't miss.
Top 2 books on REITs investing:
Achieving financial independence and early retirement through REIT investments is possible with this comprehensive guidebook which equips you with the knowledge to navigate REITs, make informed decisions, and generate wealth while avoiding costly mistakes. Start saving and investing early to secure your financial future and benefit from tax advantages.
This book provides practical insights for beginners with the necessary knowledge to analyse REITs, assess risks and benefits, choose suitable investments, balance portfolios, manage long-term investments, and include real case studies.
REIT Glossary
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Net Asset Value (NAV) per share
NAV per share, or book value per share, represents the value of a REIT's total assets (properties, cash, and investments) minus its liabilities, divided by the number of outstanding shares. It tells investors the approximate value of each share if the REIT were to be liquidated.
Price to NAV
Price to NAV, or Price to Book, compares the market price of a REIT's shares to the net value of its underlying assets (properties). If the ratio is below 1, it means the REIT's shares are trading at a discount compared to the value of its assets. If the ratio is above 1, it means the shares are trading at a premium. However, I look at the historical (at least 5 years) average Price to NAV ratio of a REIT instead to estimate its fair value.
Distributions Per Unit (DPU)
DPU is a term used to measure the income generated and distributed to unit holders (shareholders). It represents the amount of money distributed to each unit holder for every unit they own in the REIT. The DPU is typically derived from the REIT's rental income, dividend income, and other sources of revenue, minus expenses such as management fees and operating costs. Investors often look at the DPU to assess the income potential and investment return of a REIT, as a higher DPU indicates higher earnings and potential returns for unit holders.
Distribution Yield
Distribution yield measures the income generated by a REIT relative to its share price. It is expressed as a percentage and is calculated by dividing the annual distribution per unit (DPU) by the REIT's share price. The distribution yield indicates the return an investor can expect from owning the REIT's shares based on the income it generates. A higher distribution yield suggests a higher potential return, while a lower yield implies a lower return. When it comes to the distribution yield, I personally set a benchmark of no less than 4% - 5%.
Net Property Income
Net Property Income, or property’s net operating income, measures the income generated by a REIT from its properties. It represents the total rental income received from tenants, minus any property-related expenses such as property management fees, property taxes, repairs, and maintenance costs. It reflects the net earnings generated solely from the rental operations of the properties.
Property Yield
Property yield measures the income generated by a property. It is expressed as a percentage and is calculated by dividing the property's net operating income (NOI) by its market value. The NOI represents the rental income received from tenants, minus operating expenses like property management, maintenance, and taxes. A higher property yield indicates a higher return on investment, while a lower yield suggests lower income generation. In terms of property yield, I personally set a benchmark of no less than 4% to 5%.
Cost of Debt
Cost of debt is the interest expense incurred by a REIT on its borrowed funds. When a REIT takes on debt, it must pay interest to the lenders as compensation for using their money. The cost of debt represents the annual interest rate or percentage that the REIT pays on its outstanding debt. It is an important metric as it influences the overall profitability and financial health of the REIT. A higher cost of debt means higher interest expenses, conversely, a lower cost of debt indicates lower interest payments. However, the cost of debt must be lower than its property yield.
Gearing Ratio
Gearing ratio is a measure of the level of debt or leverage used by a REIT to finance its operations and acquire properties. It is expressed as a percentage and is calculated by dividing the total debt of the REIT by its total assets. The ratio helps assess the REIT's financial risk and stability. A higher gearing ratio indicates a higher proportion of debt compared to assets, suggesting higher financial risk. Regarding the gearing ratio, I personally establish a benchmark that should not exceed 40%.
Interest Coverage Ratio
Interest coverage ratio measures a REIT's ability to cover its interest expenses with its operating income. It gauges the extent to which the REIT's earnings can accommodate the interest payments on its outstanding debt. The ratio is computed by dividing the REIT's EBITDA by its interest expense. Net operating income can be used in place of EBITDA. A higher interest coverage ratio indicates a greater capacity to meet interest obligations, signifying a lower risk of default. Conversely, a lower ratio suggests a higher risk as the REIT's earnings may be insufficient to cover interest costs. REITs should have an interest coverage ratio of 3.0 or above.
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Why Singapore REITs?
Real Estate Investment Trusts (REITs) are investment vehicles that allow individuals to collectively invest in income-generating assets in the real estate market. These assets primarily generate income through rent collection and include office buildings, shopping malls, warehouses, healthcare facilities, hotels, and data centres. In Singapore, REITs listed on the stock exchange are referred to as S-REITs.
REITs have different regulations in different countries
REITs are subject to different regulations in different countries. To qualify as REITs, real estate portfolios must meet specific criteria based on their location. As a result, regulations and requirements for REITs differ among countries such as Australia, the United States, and Singapore.
Various factors, including the allowable level of debt, the minimum proportion of profits distributed to unitholders, and the maximum number of fully developed properties, vary across countries.
Cash payouts from REITs
Cash distributions from REITs are a primary objective worldwide. REITs aim to generate a significant level of income distribution and long-term appreciation in unit prices for investors.
Rental income from tenants, which can include individuals, small businesses, or large corporations leasing properties for their operations, is the main source of revenue for REITs. Income generated from a REIT's assets is distributed to unitholders at regular intervals, usually twice a year. This makes REITs an appealing option for generating income. However, fees associated with REIT management, property management, and trusteeship are deducted from these distributions.
What makes S-REITs an attractive investment option according to the SGX listing rules?
1. At least 75% of a REIT's investments must be in mature, income-producing properties. This excludes development properties that consume cash instead of contributing to cash flow.
2. The maximum debt ratio for a REIT's assets is 45%. This is crucial because higher debt levels would require more cash to service the debt.
3. Singapore REITs are required to distribute at least 90% of their income as dividends. The mix of tenants is important in achieving this requirement. The average dividend yield for S-REITs is around 6%, significantly higher than yields for most other asset classes.
4. The Monetary Authority of Singapore (MAS) has consistently focused on enhancing corporate governance in the S-REIT industry. This includes prioritizing investors' interests over those of the manager and sponsor during conflicts of interest. Such emphasis on good corporate governance ensures investor protection and supports the growth of the Singapore REIT market.
Bottom line
REITs, including S-REITs in Singapore, offer individuals the opportunity to collectively invest in income-generating properties. With distinct regulations distribution payout and strict debt ratios, REITs provide investors with a means to generate income and potentially benefit from long-term appreciation. These investment vehicles continue to play a vital role in the real estate market and offer potential opportunities for those seeking stable returns.
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