SG REITS

SG REITS: CIMB recommends ‘Go yield’. Note that three facts favour REIT investors:
1) tax transparency. REITs pay 90-100% as dividends or they will have to march to the Income Tax Department to face the music;
2) having been scalded by the recent (yes, recent) Global Financial Crisis, REITs have been very careful in managing their gearing and
3) Uncle Bernanke has pledged to keep rates low for next few years and that’s music to REITs’ ears as Singapore interest rates are likely to remain low too.

House prefer the resilient Industrial and Retail segments and favour REITs with low gearing. Top picks are AREIT (TP $2.15, 6.4% yield), FCOT (TP $0.91, 7.2% yield), Starhill (TP $0.68, 6.8% yield) and Cache (TP $1.15, 8.3% yield). Also like CMT (TP $1.99, 5.5% yield) and CDLHT (TP $2.06, 6.3% yield) at current valuations.