Office REITs

Office REITs: 1Q results for the office REITs were in line. Occupancies held up well despite weak market conditions, but rental reversions were slower in general. Nevertheless the house stays cautious on Office REITs, because the sector has just tipped over, and unlikely to bottom until 2018. But despite impending headwinds, the house expects REITs prices to hold up amid a weak interest rate environment. Maybank-KE has Hold calls on CCT (TP $1.40), KREIT (TP $0.97) and Suntec REIT (TP $1.56). The house prefers CCT for investors wanting subsector exposure.