Top 10 Singapore REITs that made you money if you invested from their IPOs

Lately, Sabana REIT has been getting a lot of attention when a small group of unitholders moved to kick out the manager for delivering poor performance since its IPO in 2010. Early investors who bought Sabana at an IPO price of S$1.05 are now sitting on huge losses – Sabana last traded at just 43 cents per share.

If we look at the history, Sabana REIT isn’t alone. There are several other Singapore REITs (S-REITs) like Saizen REIT, MacarthurCook Industrial REIT and Allco REIT that have run into trouble before and caused a dent in Singapore’s REIT sector. Despite some casualties, Singapore’s REIT market remains vibrant – largely thanks to the majority of S-REITs that continue to deliver good results to income investors.

In this article, we look at the performance of S-REITs with a listing history of at least 10 years. We wrote about the performance of S-REITs one year ago and this time around, we revisit the article by taking into account the latest share prices as at 31 Jan 2017 and dividends paid out to unitholders up to 2016. We also made several adjustments such as pre-consolidation shares and dividends to get a more precise and accurate picture.

There are 19 Singapore REITs that IPOed in 2007 or earlier but Saizen REIT will be excluded since its underlying assets were fully divested in 2016.

Again, we assume that John (a fictional character) invests in all of these REITs equally from the day the REIT listed. Since John is a hard-core income investor and wants to keep all his cash, he doesn’t want to come out with any money to subscribe to rights issuances (if any) and is prepared for any share dilution. Let’s also assume that John also forgets to sell his nil-paid rights from which he can make a profit from.

Let’s assume that John invested $1,000 in each of these REITs. For example, if John invested in Fortune REIT during its IPO, his initial investment of $1,000 would’ve grown to $1,900 (+90% in capital gains) as at 31 Jan 2017.

On top of that, he would have collected annual dividends of $61.80 in 2004, $69.03 in 2005, $72.98 in 2006, and so on and so forth. We’ll include dividends in our calculation of overall annualized returns.

And to keep things simple, we will exclude brokerage costs, currency exchange gains/losses and taxes that might be applicable to the foreign investors.

So after investing for more than ten years, here are the top 10 best-performing REITs for John (annualized returns are inclusive of dividends):

10. Fortune REIT (Annualized return: +7.7%)

 

9. Suntec REIT (Annualized return: +8.3%)

 

8. Mapletree Logistics Trust (Annualized return: +8.5%) 

 

7. CapitaLand Mall Trust (Annualized return: +8.9%)

 

6. First REIT (Annualized return: +10.0%)

 

5. ParkwayLife REIT (Annualized return: +10.1%) 

 

4. Frasers Centrepoint Trust (Annualized return: +10.1%)

Frasers Centrepoint Trust (FCT) achieved similar annualized return as ParkwayLife REIT but we are giving the former a better rank as FCT produced a higher total investment return than ParkwayLife REIT.

3. CDL Hospitality Trust (Annualized return: +10.2%) 

 

2. Ascott REIT (Annualized return: +10.3%) 

1. Ascendas REIT (Annualized return: +11.1%)

In summary, here is John’s overall performance:

Though John has his wins, he also made a few mistakes and he lost money in LMIR Trust, Allco REIT, MacarthurCook Industrial REIT, and Saizen REIT (a shell company now). Thankfully he diversified his portfolio as it is never a good idea to put all your money in one single stock. So those losses are certainly not going to keep him awake at night. After all, his gains in those 15 S-REITs would be more than enough to cover the losses and still leave him with excess profit.

On top of that, John is still very profitable without having to come out with any additional capital to subscribe to any rights. However, if he had subscribed to them (including excess rights), he would have made more money since rights are usually sold at a discount. At the end of the day, John continues to receive regular quarterly dividends from his S-REITs in good times and in bad.

As you can see, REITs remain a good choice for anyone who wants to build a steady and consistent stream of passive income. However, please note that you shouldn’t buy or avoid a REIT just based on the data above as past performance is not necessarily indicative of future results.

It’s highly important to have a proper investment process to help you identify and invest in the right REITs that will give you a continual stream of passive income and capital gains down the road.

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Rusmin Ang is an equity investor and co-founder of The Fifth Person. His investment articles have been published on The Business Times BTInvest section and Business Insider. He has also been featured multiple times on national radio on 938LIVE for his views and opinions on how to invest successfully in the stock market. Rusmin is on the speaking circuit for CIMB Securities (Malaysia) and has spoken at events in Penang, Sibu and Kuala Lumpur and is the co-author of Value Investing in Growth Companies published by Wiley, Inc. The book can be found in all major book stores worldwide and on Amazon.com, Barnes & Noble and Apple's iBooks. Rusmin was actually a former SIAEC scholar who gave up his scholarship and a cushy career to follow his itch of learning how to be a better investor and ultimately lead a life of financial independence. He believes that anyone, even with a regular job, can achieve more financial peace-of-mind by investing intelligently and safely for the long term.

6 Comments

  1. DUFY

    February 14, 2017 at 12:40 pm

    Thanks for the sharing. What if take into the rights issues assuminng that John would subscribe all the rights issue, then what will the ranking look like?

    Thanks.

    • Rusmin Ang

      February 17, 2017 at 5:57 pm

      Hello Dufy,

      I haven’t calculated the return if rights are included as it can be quite subjective. This also depends on the amount of excess rights subscribed and allotted successfully.

      But I think you bring up a good point. I could probably consider making another assumption where John subscribes to rights (ignoring excess rights) and measure his overall performance. Thanks!

  2. Pingback: 11 Malaysian REITs that made you money if you invested from their IPOs – The Fifth Person

  3. Pingback: 11 Malaysian REITs that made you money if you invested from their IPOs

  4. Melanie

    May 30, 2017 at 6:14 pm

    Hi, Thanks for the analysis. May i know how you calculated the CAGR returns? Can’t seem to figure that out. Thanks!

    • Rusmin Ang

      May 31, 2017 at 3:15 pm

      Hi Melanie,

      You can use the CAGR calculator from Investopedia. The initial value is the IPO share price and the final value is the latest share price (for this article it is 31 Jan 2017) plus accumulated dividends since IPO. Then count the number of periods for the REIT. You should be able to get CAGR very close to my estimate.

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