investing in reits - stocksbnb · 10/10/2016 · investing in reits 10 oct 16, 8.15am/11.15am...

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Investing in REITs

10 Oct 16, 8.15am/11.15am Morning Call/Webinar



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Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



Investing in REITs

Still awaiting the elusive 2016 rate hike

Tan Dehong

Phillip Securities Research Pte Ltd

10 Oct 2016



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Rate hike expectations see-saw

• Fed rate hike expectation chart, from expected 4 hikes in 2016 at end 2015

0

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100

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16

%

0-0.25 0.25-0.5 0.5-0.75

Source: Bloomberg, Phillip Securities Research (Singapore)

Fed Rate Hike Probability (For Dec 2016 Fed Meeting)



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Global easing monetary policies

• Global interest rates chart

Global 10 year bond yields



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Dispelling a commonly held belief…

• Rising interest rates and REITs – REITs performed in rate hike cycles

• Focus on bigger picture

Easy monetary policies by major central banks

FED re-iteration of slow gradual rate hike process

Performance of regional REITs Nov 2004-2007



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REITs outperformed in last rate hike cycle

S&P 500 MSCI US REIT Index

26% 32%

STI FTSE Straits Times REIT Index

53% 67%

S&P/ASX 200 S&P/ASX 200 A-REIT Index

50% 42%

% Appreciation November 2004 - 2007

Source: Bloomberg, PSR (Singapore)

• Rising interest rates and REITs

• Focus on bigger picture

Easy monetary policies by major central banks

FED re-iteration of slow gradual rate hike process



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Performance of regional REITs markets

Major REITs markets around the world

Source: Bloomberg, PSR (Singapore)

Market Number of REITs Market Cap (US$b)

US 249 1107

UK 42 63

Japan 54 111

Australia 47 108

Singapore 38 50

Hong Kong 11 30



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Performance of Regional REITs 2009-Present

HK, US Outperform



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Performance of Regional REITs 2000/Inception-Present

HK, SG Outperform



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Yield Spread Charts - Australia

ASX 20 REIT Index Spread over Australian 10y yield

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Yield Spread Mean (From 2010) +/-1SD +/-1SD




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Yield Spread Charts - Singapore

FTSE REIT Index Spread over Singapore 10y yield

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2008 2009 2010 2011 2012 2013 2014 2015 2016





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Yield Spread Charts – U.S.

MSCI US REIT Index Spread over US 10y yield

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Investing in REITs vs Physical Properties

• Liquidity

• Affordability

• Access to overseas and unique classes of properties which are not usually

easily accessible to retail clients eg. Shopping malls, Golf courses, hospitals

• Taxes

• Self-managed vs Professionally managed

Asset Enhancements Initiatives – Turnaround of Iluma Mall by CapitaLand

Mall Trust: Achieved 7.1% yield on cost (S$300m) after AEI

Stable mall occupancies throughout crises



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Investing in REITs vs Physical Properties

Source: REALIS, Bloomberg, PSR (Singapore)

Returns for REITs vs Other Physical Property asset class (since GFC)

Index Level

S-REIT indexPrice Index (All Private

Resi include EC)

Private Residential

CCR (Non-Landed)

Private

Residential OCR

(Non-Landed)

Office Space Shop Space

2010 Q1 617 125.1 122.4 125.7 93.7 107.5

Current 764 140 129.4 156.5 136.1 123.9

Change 24% 12% 6% 25% 45% 15%



16

Disclaimer

The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to

believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this

presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or

warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any

such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the

information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be

liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made

available, even if it has been advised of the possibility of such damages.

This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or

particular needs of any particular person.

You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment

objectives, financial situation or particular needs, before making a commitment to invest in such products.



17

Analysts Pei Sai Teng, Macro

Jeremy Ng, Technical Analysis

Jeremy Teong, Banking & Finance

Soh Lin Sin, Consumer | Healthcare

Richard Leow, Transport | REITs (Industrial)

Dehong Tan, REITs (Commercial, Retail, Healthcare) | Property

Peter Ng, Property | Infrastructure

Ho Kang Wei, US Equity

Chen Guangzhi, Oil and Gas | Energy

By Phillip Securities ResearchMohamed Amiruddin, Operations Exec

Ask Questions!

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investing in reits - stocksbnb · 10/10/2016 · investing in reits 10 oct 16, 8.15am/11.15am...

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