My own “analysis” of Lion-Phillip S-REIT etf

With many internet bloggers giving their views of Lion-Phillip S-Reit ETF (CLR.SI), I do not want to sound like a broken record. I want to focus on try to derive how Morning Star selects which reit to out into their basket

Morning Star says the REITs are scored on basis of

  • Dividend Yield
  • Economic Moat
  • Distance to default

These 3 scores contribute equal weights. REITs with above average scores are allocated more weight in the index. The number of REITs in this index is variable. Morning Star rebalances its constituents semi annually in June and December.

The 23 REITs that is in.

  1. Ascott
  2. Ascendas
  3. CapitaLand Mall
  4. CapitaLand Retail Commercial
  5. CapitaLand China
  6. CDL HTrust
  7. Far East Hospitality
  8. Frasers Centrepoint
  9. Frasers Commercial
  10. Frasers HTrust
  11. Frasers L&I
  12. First Reit
  13. LippoMalls
  14. Keppel Reit
  15. Keppel DC
  16. Mapletree Commercial
  17. Mapletree Industrial
  18. Mapletree Logistics
  19. Mapletree GCC
  20. OUE HTrust
  21. Parkway Life
  22. Starhill
  23. Suntec

The 14 missing REITS:

  1. OUE Commercial
  2. SPH
  3. Ascendas HTrust
  4. Aims
  5. Cache
  6. ESR
  7. Viva
  8. Soilbuild
  9. Sabana
  10. BHG
  11. EC World
  12. Fortune
  13. US Manulife
  14. iREIT

My observations

  • All the REITs that are in have Market Cap above S$1B, which means that none of the REITs with market cap below S$1B made it into their index.
  • Only 2x REITs with market cap above S$1B did not make it into their index – SPH Reit and Fortune. My speculation is that these 2 REITS has too few properties. All other REITs that made it into the index has more properties.
  • Almost all the selected REITs have the lowest dividend yields amongst the SREITs universe – except for LippoMalls. If I were to buy this index, I am probably buying the lowest yields of the SREITs universe, but probably the strongest.

A few years ago, I would probably would have considered buying this ETF. But with continual education,

  • I hope to and expect to be able to select my own REITs to outperform the index
  • I will try to save the 0.5% management fee. 0.5% of 4.8% means 10% of my dividends returns is paid to Phillip per year.
  • Distributions made by S-REITs to Lion-Phillip S-Reit ETF will be subjected to 17% Singapore corporate tax. Instead of getting 4.8% yield, I could have been getting 5.6% if there were no such corporate tax.
  • Personally, my preferred REIT ETF is NikkoAM-STC Asia REIT (CFA.SI)
  • Both NikkoAM-STC Asia Reit as well as Lion-Phillip S-Reit can be supercharged, meaning financing at 2.88% and earning difference between rates.

  • I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please contact me regarding how to become my client; It's free!