JeffreynGerardJeffrey Lee, Phillip Capital Management MD & CIO (left) and Gerard Lee, Lion Global Investors CEO, are joining forces for the first time -- to provide economies of scale for investors through the Lion-Phillip S-REIT ETF.
(Photo: Ngo Yit Sung)

Demand for REITS is on the rise because a low interest rate environment is now the new normal. Secondly, an ageing population means increasing demand for regular income from an investment portfolio is also contributing to REIT demand.

The Lion-Phillip S-REIT ETF, which was launched on 2 October, aims to strengthen the REIT value proposition with smart betas for tactical allocation in one of the world's highest quality REIT sector -- Singapore's.

The ETF, which commences its trading on SGX from 30 October 2017, seeks to track the performance of the Morningstar® Singapore REIT Yield Focus IndexSM, before expenses. The IPO has an unit issue price of S$1, and is open for application from 2 October to 20 October through Phillip Securities, DBS Vickers, UOB Kayhian, or Commerzbank.


REIT value proposition

Real estate prices and rents tend to rise at rates that track or exceed inflation. However, direct real estate ownership has drawbacks such as concentration risk, illiquidity, and management costs.

Retail investors who wish to invest in real estate and avoid these drawbacks often find REITS to be the more viable investment option.

LQM ad141eMore and more investors have gone passive. Over the last 15 years or so, passive investing through ETFs has gained a lot more traction.

- Gerard Lee
Lion Global Investors


Investing in a REIT offers the following investment edge which would otherwise be the exclusive turf of institutions.

  • Access real estate investments in physical assets, and not only in the shares of a listed property developer.
  • Access a large scale diversified portfolio of physical real estate.
  • When the physical real estate assets increase in market value, or if the REIT makes an accretive acquisition, investors benefit from gains in the REIT market value.

Lion Phillip S REIT ETF 1.) Bugis Junction is one of 16 shopping malls in Singapore owned by CapitaLand Mall Trust.
2.) Suntec City Convention Centre is part of 4 properties in Singapore and 3 in Australia owned by Suntec REIT.
3.) 8 Chifley Square, Sydney is one of the 9 premium office assets in Singapore and Australia owned by Keppel REIT.
4.) Capital Tower is one of 10 properties in Singapore's central area and next to MRT stations owned by CapitaLand Commercial Trust.

star bullet whiteActive-to-Passive Middle Ground

The Morningstar® Singapore REIT Yield Focus IndexSM is one of Morningstar’s strategic beta indexes. Security weights (capped at 10% each) are adjusted on the basis of their composite scores for the following factors.


REITS with economic moats — something inherent in its portfolio model that rivals cannot easily replicate, score high on Morningstar's quality screen.

Morningstar® Singapore REIT Yield Focus IndexSM
No. of REITS 23
Rebalancing Frequency Semi-annual
Single Security Maximum Weight 10%
Price / Earnings 14.8x
Price / Book 1.03x
Dividend Yield (ttm) 5.75%
Source: Morningstar, Bloomberg, Lion Global (as at August 2017)

Financial Health

Morningstar uses option pricing theory to rank risk of financial distress among peers.

A REIT with lower risk of its assets turning out to be less than the sum of its liabilities will be assigned a higher weight.

The real estate sector of developed Asia Pacific markets (i.e. Singapore, Japan, Hong Kong, Australia, and New Zealand) is used as the reference peer group.

Dividend Yield

REITs based in Singapore offer higher yield compared to other asset classes and other REIT markets.
REIT div Asia6Bloomberg Consensus: REIT Dividend Yield for 2017
They provide exposure to a prosperous and stable hub for global trade and finance. A number of them are also pan-Asia players (Mapletree Greater China Commercial Trust, Starhill Global REIT, CapitaLand Retail China Trust, and Lippo Malls Indonesia Retail Trust).

The Lion-Phillip S-REIT Fund intends to declare dividends every February and August and will conduct rebalancing semi-annually in June and December.


Morningstar® Singapore REIT Yield Focus IndexSM 

  Index Constituent Weighting
1 CapitaLand Mall Trust 10.76%
2 CapitaLand Commercial Trust 10.25%
3 Suntec REIT 9.89%
4 Mapletree Commercial Trust 8.98%
5 Keppel REIT 8.54%
6 Ascendas REIT 8.02%
7 Mapletree Industrial Trust 7.64%
8 Mapletree Logistics Trust 5.52%
9 Ascott Residence Trust 4.54%
10 Mapletree Greater China Commercial Trust 3.55%
11 CDL Hospitality Trusts 3.50%
12 Starhill Global REIT 3.44%
13 Frasers Commercial Trust 2.35%
14 Parkway Life REIT 2.34%
15 Frasers Centrepoint Trust 1.97%
16 Keppel DC REIT 1.71%
17 OUE Hospitality Trust 1.42%
18 CapitaLand Retail China Trust 1.26%
19 Lippo Malls Indonesia Retail Trust 1.12%
20 Frasers Logistics & Industrial Trust 0.88%
21 First REIT 0.86%
22 Far East Hospitality Trust 0.76%
23 Frasers Hospitality Trust 0.70%

Data: Morningstar Research (as at 31 August 2017)

For the IPO prospectus, click here.

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