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REITs that are unlikely to ask you for money this year

Goola Warden & Lewis Lim Published on Mon, Jan 15, 2018 / 10:56 AM GMT+8

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SINGAPORE (Jan 8): When a few real estate investment trusts raised equity through rights issues in 2017, some unitholders were unhappy. Among them were unitholders of Manulife US REIT. This year, though, with a distribution per unit (DPU) uplift from a couple of acquisitions, Manulife US REIT is unlikely to ask unitholders for more cash. It is probably one of two commercial REITs that may not be tapping unitholders for equity. The other is CapitaLand Commercial Trust (CCT).

Office sector upswing
Growth is returning to the office sector, according to DBS Research. On Dec 15, the brokerage made a bold forecast: “In 2018, after years of downturn, the office sector is projected to deliver 12% y-o-y growth in rents, as take-up rates for new buildings have been robust while new supply entering the market over 2018 to 2020 (600,000 sq ft per year) remains supportive of higher rents.”

Maybank Kim Eng Research expects capital values to stay strong because of “keen interest in office assets”. It forecasts office yields will remain at 3.1% for 2018, unchanged from 2017. The main beneficiaries of firmer capital values and a recovery in rents are likely to be the REITs that acquired Grade-A Singapore office buildings last year and have lease expiries this year and in 2019.