REITs: Recent pullback among S-REITS is beginning to throw up value in some names, as S-REIT yields spreads over MAS 10 yr bonds yields widened to 408bps, or 84bps over the historical average.
Valuations are starting to look attractive in the near term, and CLSA remains selective from a bottom-up basis.
Versus regional REIT markets, SREITs now enjoy the second-widest yield gap over respective long bond yields nad highest gap in absolute terms. The house believes that slower rental growth and margin pressures have already been factored in by the street.
CLSA’s order preference is industrial, retail, office, hospitality. Top picks are MAGIC (Buy, TP $1.08), MCT (O-PF, TP $1.39), AREIT (O-PF, TP $2.46). Least preferred are CT (Sell, TP $1.67) and Suntec (Sell, TP $1.39)
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