One common argument many REIT investors have is that regardless of whether prices go up or down, they'll continue to receive a distribution yield – which they can reinvest or use in their retirement income.
As the economic fallout from COVID-19 has shown, there can be extreme scenarios where those people who are over-reliant on REITs or have over-leveraged themselves to buy REITs may be in for a rude shock. Not just have prices dipped by as much as 50% and more for some REITs, the ability to collect rent and continue paying a distribution has been severely impacted.
While it's true that nobody could have planned for COVID-19, the idea of a black swan event impacting our portfolio is comparatively well-known. Arguably, it has happened often in history – with the a couple of the latest being the Global Financial Crisis in 2008, and the Dot-Com bubble in 2000.
How Has COVID-19 Impacted REIT Prices In Singapore?
There are gone 45 REITs listed on the Singapore Exchange (SGX), which is the only STI stock still positive for that year. There are a further thee REIT ETFs in Singapore – Phillip SGX APAC Dividend Leaders REIT ETF, NikkoAM-Straits Trading Asia Ex Japan REIT ETF, Lion-Phillip S-REIT ETF.
According to SGX, the REITs sector has plunged close to 22% since the start of the year, and at its lowest point, it's declined as much as 34%.
DollarsAndSense publishes an every three months REITs report card column detailing how individual REITs have performed, but as you can see from the chart above, a lot can change in just a few days or weeks within the stock market right now.
How Have REIT ETFs Fared?
Firstly, we ought to note that ETFs are listed funds that pool together the funds of smaller individual investors to purchase assets that track a particular index.
As such, there are several benefits to investors, namely high liquidity since it can be traded on the stock exchange, allows diversification into numerous underlying assets with just a small amount of money, and offers a passive investment because there are no active managers buying or selling assets.
As stated, these are the three REIT ETFs listed in Singapore.
| No | REIT ETFs | Price Today (Price At Start Of 2021) |
Price Change In 2021 |
| 1 | Phillip SGX APAC Dividend Leaders REIT ETF | $1.087 ($1.489) |
-27% |
| 2 | NikkoAM-Straits Trading Asia Ex Japan REIT ETF | $1.004 ($1.254) |
-20% |
| 3 | Lion-Phillip S-REIT ETF (SGX: CLR) | $0.915 ($1.164) |
-21% |
As we are able to see, the REIT ETFs performance was fairly near to how the iEdge S-REIT Index fared. This is because many of the constituents in the REIT ETFs are Singapore-listed REITs too.
While the returns of REIT ETFs may not be any better than how Singapore REITs performed, we should not think that it doesn't provide any benefit. As our investments are diversified, we do not take the risk of picking the wrong REIT, or benefit from picking the right REIT.
How Individual REITs Have Performed In 2021
As Singapore is a REIT hub, there are as many as 47 REITs and property-related business trusts on SGX today, with several owning assets entirely beyond Singapore. Here's how the best and worst REITs have performed.
10 Worst Performing REITs In Singapore
| No | REITs | Price Today (Price At Oncoming of 2021) |
Price Change In 2021 |
| 1 | Eagle Hospitality Trust | US$0.137 (US$0.55) |
-75% |
| 2 | ARA US Hospitality Trust | US$0.375 (US$0.87) |
-57% |
| 3 | Lippo Malls Trust | $0.103 ($0.23) |
-55% |
| 4 | ESR-REIT | $0.28 ($0.53) |
-47% |
| 5 | CDL Hospitality Trust | $0.89 ($1.62) |
-45% |
| 6 | Lendlease REIT | $0.535 ($0.93) |
-42% |
| 7 | Sabana REIT | $0.28 ($0.46) |
-39% |
| 8 | Starhill Global REIT | $0.455 ($0.73) |
-38% |
| 9 | Far East Hospitality Trust | $0.46 ($0.74) |
-38% |
| 10 | Ascott Trust | $0.855 ($1.33) |
-36% |
If we'd decided to invest in individual REITs by ourselves, rather than one of the REIT ETF, we could be a lot worst off if we picked any one of the top ten worst performing REIT. Among these REITs, there are also strong names such as Ascott Trust, Far East Hospitality Trust and CDL Hospitality Trust.
Some from the other names may be smaller REITs, however they typically tend to offer better yields (and therefore higher risk) for investors.
On another hand, we could have done better by picking some of the top 10 best performing REITs.
10 Best Performing REITs In Singapore
| No | REITs | Price Today (Price At Oncoming of 2021) |
Price Change In 2021 |
| 1 | Keppel DC REIT | $2.35 ($2.08) |
13% |
| 2 | Mapletree Logistics Trust | $1.72 ($1.74) |
-1% |
| 3 | Dasin Retail Trust | $0.795 ($0.84) |
-5% |
| 4 | Ascendas REIT | $2.79 ($2.97) |
-6% |
| 5 | Parkway Life REIT | $3.32 ($3.11) |
-6% |
| 6 | Mapletree Industrial Trust | $2.60 ($2.40) |
-8% |
| 7 | EC World REIT | $0.62 ($0.75) |
-17% |
| 8 | CapitaLand Retail China Trust | $1.31 ($1.61) |
-19% |
| 9 | IREIT Global | $0.64 ($0.81) |
-21% |
| 10 | Frasers Commercial Trust | $1.30 ($1.66) |
-22% |
The only REIT that has managed a positive share price grow in 2021 is Keppel DC REIT. One valid reason is the need for data storage during COVID-19.
We can also see the strongest performing REITs tend to be those that are supported by strong sponsors. Interestingly, three China-focused REITs – Dasin Retail Trust, EC World REIT and CapitaLand Retail China Trust – made the top 10 list. Two of these China-focused REITs will also be retail-focused.
We can also see that IREIT Global and Frasers Commercial Trust returned -21% and -22% respectively, that is close to what the REIT ETFs returned. This means if we picked the other 37 REITs, we may have been worst off than simply investing in the REIT ETF. This is also because REIT ETFs tend to comprise bigger and more liquid REITs as well.
* All figures in the following paragraphs are accurate as at 9 April 2021.
