REITs

REITs: According to HSBC, 3Q15 results suggest in line to better-than-expected performance.

In the retail sector, tenant sales and shopper traffic continued to improve, while in the hotel sector, the pace of y/y slow-down in RevPAR slowed in 3Q. In industrials, AREIT’s business parks saw 13.2% positive rental reversions, better than the 8.3% in the previous quarter. The outlook for office and serviced apartments are most uncertain

Among recent themes, overseas acquisitions to support DPU growth, and the issuance of perps could pick up amid increased acceptance of this instrument as part of the capital structure.

Lastly. the divestment of Saizen’s REIT assets at close to appraisal value (recall, the REIT was trading at a steep discount to NAV prior) puts focus on privatisation and public-private arbitrage opportunities within the sector.

HSBC prefers CCT, KREIT and FEHT, where the house opines weakness are priced in.