Introduction

The Singapore Real Estate Investment Trusts (S-REITs) sector has recently undergone a share price correction, leading to more reasonable valuations. Despite a toned-down optimism due to risk-off sentiment driven by elevated US Treasury yields, OCBC Investment Research recommends selectively accumulating quality names on further pullbacks.

Sector Overview

The research identifies top picks within the S-REITs sector, particularly those backed by strong sponsors and in healthy financial positions with Singapore asset exposure. Highlighted companies include Frasers Logistics & Commercial Trust, CapitaLand Ascott Trust, CapitaLand Ascendas REIT, CapitaLand Integrated Commercial Trust, and Parkway Life REIT.

Recent Developments

• Mapletree Logistics Trust completed the divestment of Mapletree Xi’an Logistics Park in China.
• CapitaLand Ascendas REIT acquired land in South Carolina, US, for a green-certified logistics distribution property development.
• CapitaLand Integrated Commercial Trust divested 21 Collyer Quay, reducing aggregate leverage.

Market Performance

The FTSE ST REIT Index experienced a slight decline, while the STI saw a modest increase. The valuation metrics indicate potential opportunities for investment in the S-REITs sector.

In-Depth Company Analysis

Office Sector

The office sector covers companies like IREIT Global, Keppel REIT, and Suntec REIT. Key metrics such as market capitalization, dividend yield, and debt-to-asset ratio are discussed. Notably, Keppel REIT is highlighted for its semi-annual dividends and reasonable price-to-book ratio.

Retail Sector

Companies like CapitaLand Integrated Commercial Trust and Frasers Centrepoint Trust are analyzed, showcasing their dividend yields and market positions. The retail sector remains a significant part of the REIT landscape with diverse geographical asset exposure.

Industrial Sector

Frasers Logistics & Commercial Trust and Mapletree Industrial Trust feature prominently in the industrial sector, with a focus on their yield performance and strategic asset allocations. The analysis underscores the sector’s resilience in the current economic climate.

Hospitality Sector

The hospitality sector includes CapitaLand Ascott Trust and CDL Hospitality Trusts. The analysis highlights their dividend yields and geographical diversification, which are crucial for withstanding market volatilities.

Healthcare Sector

Parkway Life REIT stands out in the healthcare sector with a robust dividend yield and strategic asset management. The report emphasizes its strong financial position and growth potential.

Data Centre Sector

Keppel DC REIT and Digital Core REIT are explored for their yield metrics and market performance. The sector shows promising growth prospects with a focus on technological infrastructure.

Other Sectors

Cromwell European REIT is covered under the ‘Others’ category, with insights into its European market exposure and performance metrics.

Distribution and Recommendations

Details on distribution per unit (DPU) and upcoming payout dates are provided for key REITs. The report recommends a “BUY” rating for many companies, indicating strong growth potential and attractive returns.