Singapore REITs

Maybank TV: Singapore REITs - How to position for a US rate hike?

Maybank TV interviews Joshua Tan, investment analyst at Maybank-KE, who shares his insights on the Singapore REITs sector and on how to position for a potential US rate hike.

Key stocks – Starhill Global REIT, Mapletree Industrial Trust, Cache Logistics Trust

Overview:
SG REITs could correct by another 10%, as valuations still remain lofty.

While Maybank-KE is Underweight the sector, pockets of opportunities exist, where the house is advocating a stock-selection strategy.

Clients’ chief argument for underweighting the sector is an impending rate hike, which could precipitate capital outflows.

Look for REITs with cheap valuation and stock specific strategies which can boost DPU growth. We are generally facing a capacity oversupply in all REIT sub-classes.

Stock picks:
1) Starhill Global – Rental review from Ngee Ann City next year. Also divesting into Australia. Forward yields of 5.9% in FY15 and 6.3% in FY16.

2) Mapletree Industrial Trust – Two large build-to-suit projects coming on over the next two years. Forward yields of 6.8% in FY15 and 7.1% in FY16

3) Cache Logistics Trust – Defensively positioned and prudent debt management. Forward yields of 7.4% in FY15 and 8.0% in FY16.

The video can be accessed via the following link below:
https://www.youtube.com/watch?v=PazJKpix2jk