She believes investors will continue to remain risk-off and prefer REITs because of their more resilient earnings profile. As a whole, the sector is trading at P/B of 1.1 times price to book and at a 4.5% forward dividend yield, which is a significant 310 basis points over the benchmark 10-year Singapore government bond yield. Lock expects DPUs of S-REITs to grow by 2.2% this year, and a further 2.6% the following year.
SINGAPORE (Mar 6): Analysts have upgraded Singapore REITs (S-REITs) following the ‘emergency’ 50 basis point rate cut by the US Fed, but banks were downgraded on expectations of thinner interest margins.
“We believe as interest rate outlook continues to remain benign, there is room for S-REITs to refinance their existing debts at cheaper rates, or extend debt maturity at minimal incremental cost,” says CGS-CIMB analyst Lock Mun Yee. Moreover — with lower funding costs and higher valuations — it will be an opportunistic time for SREITs to explore new acquisitions, says Lock, who on March 5 upgraded the S-REITs sector from “neutral” to “overweight”.
