SG REITs: HSBC has sector report. Note that sector less vulnerable but not immune. Most office SREITs expect market activity to slow, watching demand drivers closely. Sector-wide leverage has inched up and this is likely to continue over the next few years. Sector is less vulnerable but not immune, with larger market-cap REITs commanding a premium.
Low interest rate is driving earnings for some SREITs, and REITs benefiting from this are Suntec REIT, Mapletree Commercial Trust and Mapletree Logistics Trust, with low interest rates and higher than average leverage; while CapitaRetail China Trust, Mapletree Logistics Trust and Parkway Life REIT benefit from lower debt costs.
SG REITs: UBS has sector report. Note that REITS trading at 6.6% CY11E yield (+482bps to 10Y government bond) and yields have expanded 40bps over the past two wks.
Expect SREIT DPU growth of 2.5% p.a. (2010-14E), with hospitality and retail REITs leading the growth at 6.2% and 4.1%, respectively. Think yields in the industrial segment are resilient and like Mapletree Industrial for its 6.9% FY12 DPU yield with strong 5.4% DPU growth over FY10-14. Also think AREIT is attractive at 6.6% yield with 1.2% DPU growth.
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