• With global inflation set to outpace global growth by 5% in 2022, the FTSE ST REIT Index has generated a 10% decline in total return this year, with the FTSE EPRA/NAREIT Developed Index declining 22%. This has brought the 5-year total return of the FTSE ST REIT Index to 15%, compared to 8% for the FTSE EPRA/NAREIT Developed Index.
   
• The FTSE ST REIT Index ended 18 Nov at a 7% discount to book value, up from a 16% discount a month ago. Since 21 Oct, majority expectations for the 14 FOMC Fed Funds Rate have markedly moved from 75bps to 50bps, while the 10-year UST yields have declined from above 4.2% to below 3.8%.
   
• The most defensive REIT and property trusts in the YTD included CDL Hospitality Trusts, Far East Hospitality Trust, Sabana Industrial REIT, CapitaLand Integrated Commercial Trust and Suntec REIT. Sabana Industrial REIT, CapitaLand Integrated Commercial Trust and CDL Hospitality Trusts also ranked among the five Trusts that booked the highest YTD net fund inflows proportionate to current market value. 
   

Over the past month, the FTSE ST REIT Index has generated a 12.0% total return on the back of a marginally less hawkish outlook for US Interest rates. This has also seen the 10-yr UST yields decline from above 4.2% on 21 Oct to below 3.8% at present, with the US Dollar Index also declining from above 113 to near 107. The partial rebound of the S-REIT Sector over the past month has also pared the FTSE ST REIT Index decline in total return for the 2022 year to 18 Nov to 10%, compared to the FTSE EPRA/NAREIT Developed Index declining 22%.

This brings the 5-year total return of the FTSE ST REIT Index to 15%, compared to 8% for the FTSE EPRA/NAREIT Developed Index. As illustrated below, the FTSE ST REIT Index has maintained some directional correlation, albeit not statistically significant correlation to the FTSE EPRA/NAREIT Developed Index over the past five years. While the FTSE EPRA/NAREIT Developed Index is more than 60% weighted to US-listed REITs, both S-REITs and US-listed REITs do compete with US Treasury Yields for fund inflows. The aforementioned decline in 10-yr US Treasury Yields coincided with the P/B ratio of the FTSE ST REIT Index increasing from 0.84x to 0.92x. Over the past five years, there have only been six weeks when the P/B ratio of the  FTSE ST REIT Index ended the week below 0.90x.

Overall the S-REIT sector has seen more than S$1 billion of net fund outflows in the 2022 year to 18 Nov, with 32 of the trusts booking net fund outflows and eight of the trusts booking net fund inflows. The five REITs that saw the highest net fund inflows currently average a 0.85x P/B ratio, whereas the five REITs that booked the highest net fund outflows currently average a 1.15x P/B ratio. The five trusts that saw the highest net fund inflows in the 2022 year to 18 Nov included CapitaLand Integrated Commercial Trust, Sabana Industrial REIT, CapitaLand Ascott Trust, CDL Hospitality Trust and Frasers Hospitality Trust, and averaged a 2.3% total return. The five trust that saw the highest net fund outflows in the 2022 year to 18 Nov included Mapletree Industrial Trust, Keppel DC REIT, Mapletree Pan Asia Commercial Trust, CapitaLand Ascendas REIT and Mapletree Logistics REIT while averaging a 10.1% decline in in total return.

Sort by the most traded REITs and Property Trusts of the S-REIT Sector, the table below details the 2022 year to 18 Nov total returns and net fund flows of the sector.

Note *Stapled Trust, ** Business Trust. Data as of 18 Nov 2022 (Source: SGX, Refinitiv, Bloomberg)