5 Singapore REIT stocks to consider for the rest of 2020
An in-depth look at the share price fundamentals of Far East Hospitality Trust, Keppel REIT, A-REIT, CapitaLand Mall Trust and Frasers Centrepoint Trust.
Like most stocks and equity prices, Singapore real estate investment trusts (REITs) have also gone on a roller coaster ride this year.
However, these five Singapore-listed REITs have proven to be relatively resilient in the face of market volatility. Their share prices have remained stable throughout the month of May, with two of them even managing double-digit percentage rebounds.
Below, we examine why these five REITS are worth a look for investors in the coming months, based on the latest analyst rating and reports.
1. Far East Hospitality Trust
Average 12-month share price target: S$0.61
Upside from latest price: 12.3%
Far East Hospitality Trust has received a consensus 12-month share price target of S$0.61 a share, based on three analyst reports. This represents an upside of 12.3% from the stock’s most recent bid price.
UOB researchers noted that while Far East Hospitality Trust was hit by the Covid-19 pandemic, the negative impact has been mitigated by the company’s master lease structure. Thanks to those agreements, fixed rents accounted for 72% of the firm’s 2019 gross revenue.
Adding to the fundamentals, they added, is the fact that parent company Far East Organisation, which owns 61% of Far East Hospitality Trust, possesses a strong balance sheet and financial track record.
Share price of Far East Hospitality Trust was flat in May 2020. Shares are trading at S$0.54 per share as of Friday 05 June 2020, based on latest IG data.
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2. Keppel REIT
Average 12-month share price target: S$1.26
Upside from latest price: 10.1%
Keppel REIT has a current consensus 12-month share price target of S$1.26 a share, according to four analysts. This represents an investment upside of 10.1% from the latest buy-in rate.
According to a UOB research note, Keppel REIT shares are worth buying at an entry price of S$1.30 per share, as its Singapore portfolio is expected to maintain positive reversions thanks to lower average rents for expiring leases in 2020 and 2021.
Additionally, keys of 311 Spencer Street – a 40-storey freehold 'Grade-A' office building in Melbourne, Australia, are expected to be handed over by the end of this year. A 30-year lease to local law enforcer Victoria Police is also scheduled to commence from the third quarter of 2020, which would boost earnings.
Keppel REIT experienced a 2.9% growth in share price in the month of May. Shares are trading at S$1.16 per share as of Friday 05 June 2020.
3. CapitaLand Mall Trust
Average 12-month share price target: S$2.28
Upside from latest price: 8.1%
In the last one month, a total of five analysts have given the stock a consensus 12-month share price target of S$2.28 a share. This represents an upside of 6.5% from the most recent bid price.
In the most recent research note - posted by DBS on 03 June, analysts had rated the CapitaLand Mall Trust (CapitaMall Trust) stock a ‘buy’ and listed it in their preferred REIT picks.
This stance was based on the fact that the developer’s Q1 revenue was in line with market estimates, and that cash retention at 70% of distributable income is sufficient in maintaining financial fluidity.
Furthermore, analysts are expecting a recovery (especially in the suburban areas) with approximately 90% of tenants allowed to resume operations as early as mid-June.
Shares of CapitaMall Trust rose 12.1% in May 2020. They are trading at S$2.11 per share as of Friday 05 June 2020, based on latest IG data.
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4. Ascendas REIT
Average 12-month share price target: S$3.45
Upside from latest price: 6.5%
A total of four analysts (based on reports dating back to 28 April 2020) have given the Ascendas REIT (A-REIT) a consensus 12-month share price target of S$3.45. This represents an upside of 6.5% from the offering’s most recent bid price.
The most recent research note was posted by DBS on 02 June, in which analysts rated the A-REIT portfolio a ‘buy’, citing an improved occupancy of 0.8 percentage points quarter-on-quarter to 91.7% across the group’s holdings, as well as positive rental reversion of 8% for its portfolio.
Share price of A-REIT was up 8.7% in May 2020. IG data shows that shares are trading at S$3.24 per share as of Friday 05 June 2020.
5. Frasers Centrepoint Trust
Average 12-month share price target: S$2.67
Upside from latest price: 2.7%
Frasers Centrepoint Trust saw its share price skyrocket 16.7% in May 2020. Shares are trading at S$1.80 per share as of Friday 05 June 2020.
For the month of June, a total of three analysts have given the stock a consensus 12-month share price target of S$2.67. This represents an upside of 2.7% from the latest bid price.
UOB researchers maintained an ‘overweight’ rating on Frasers Centrepoint and a target price of S2.85 per share, citing the company’s strong suburban mall footprint in Singapore, which allowed it to achieve ‘strong’ rental reversions of 5% for FY2019 and 5.2% in the first half of FY2020.
How to trade Singapore REITs with IG
Are you bullish or bearish on A-REIT, Frasers Centrepoint Trust and other Straits Times Index (STI Index) stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs in a few easy steps:
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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