SG Retail REITs: CS has sector report. Note that retail REITs have demonstrated resilience through crises, with sector occupancies rarely falling below 90%, and rents (especially suburban malls) behaving fairly ‘sticky’, with a low-single digit yearly growth on average.
Believe that retail REITs are better positioned to weather the ‘storm’ in the event of another global financial crisis, with a stronger balance sheet post the subprime crisis. In house view, retail REITs will continue to be resilient in this volatile mkt environment and expect them to continue delivering strong organic growth, despite global uncertainty, driven by AEI completions and strong rental reversions.
Top picks are:
(1) CMT—largest, most liquid proxy to the retail sector with the most resilient portfolio (occupancy sustained >98% through past crises);
(2) MCT—a retail play with a kicker from strong Sentosa arrivals, with earnings underpinned by strong reversions at VivoCity; and
(3) FCT—pure proxy to the more defensive suburban malls, where rents are more resilient.