S-REITs

S-REITs: CLSA favouring sector due to low interest rates, rising confidence amongst REITs managers in rental and occupancies outlook. 3Q10 Rev growth of 6% YoY supported by acquisitions and improved occupancies in line with results. Expects further acquisitions and sponsored REITs to have advantage as competition for acquisitions increases...

Notes sector’s gearing at 32% compared to hist avg of 30% can be stretched further and valuations undemanding at 0.9x book and yields at 6.8% for FY11DPU. Favours CMT, FCOT, Ascott, Ascendas, MLT, Cambridge, Suntec and K-Reit.