REIT-TIREMENT - REITs Investing & Personal Finance

REITs investment & personal finance


Sunday, June 06, 2021

9 Attractive SREITs Based on Mean Reversion

Mean reversion (or regression to mean) is a financial theory that an asset price would tend to move back to its average price over time. Various bloggers have brought up this concept from their posts: What Reversion To The Mean means ? by STEUsing Reversion to Mean for Reit Investments by Invest for Yourself and Mean reversion: How to profit between optimism and pessimism in the stock market by The Fifth Person.

Photo by energepic.com from Pexels


For REIT, instead of applying this on "share price", I would prefer to apply it on its dividend yield and price/nav. The time period is an important factor to consider as well, for certain SREITs, the past 1-year average is different by a lot from its past 5 years average. For this, I have created a table for easy comparison as below:


I have highlighted those figures with higher than average dividend yield and lower than average P/NAV in green. Now, let's filter out those REITs with green highlighted cell:

Let's only look at those REITs that are above their average dividend yield AND below their average P/NAV, regardless of 1-year, 3 years, or 5 years, below is the list:

  1. Ascendas REIT 
  2. Ascendas India Trust (BizTrust)
  3. ESR-REIT
  4. First REIT
  5. Frasers Centrepoint Trust 
  6. Keppel DC REIT
  7. Manulife US REIT
  8. Mapletree Industrial Trust 
  9. SPH REIT 

The above 9 SREITs current prices are favorable in terms of reversion to the mean reversion valuation. However, it is important to consider their fundamentals as well. You could refer to my latest reviews on SREITs Analysis page or below:

- Ascendas India Trust Review @ 22 April 2021

ESR-REIT Review @ 26 April 2021

Frasers Centrepoint Trust Analysis Review @ 30 April 2021

Keppel DC REIT Review @ 20 April 2021

- Mapletree Industrial Trust Review @ 4 May 2021

- SPH REIT Review @ 31 March 2021


For convenience's sake, I have added this table to the SREITs Data spreadsheet, under the "Average" sheet. It is conditionally formatted to highlight relevant cells in green when the dividend yield is over the average value and when the P/NAV is below the average value. If you would like more detail on +2SD, +1ST, -2SD and -1SD information, you could also refer to SREITs Dashboard page for individual SREITs detail.

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