Singapore’s high-yield REITs attractive, Morgan Stanley says

Singapore’s real-estate investment trusts will see increasing demand from investors as high dividend yields, low borrowing costs and an appreciating currency boost their attractiveness, Morgan Stanley said. Yield spreads for REITs will remain high while interest rates are low, meaning cheaper funding costs for the trusts, analysts Brian Wee and Wilson Ng wrote in a reported dated Oct. 1. The rise of Singapore’s dollar against the U.S. currency may add to demand for the city-state’s Singaporean dollar- denominated REITs, the analyst said. “As long as interest rates stay low, Singaporean REITs will be in a favorable position because their funding costs will remain low,” wrote the analysts. “We think the downside for Singaporean REITs is limited, as yields will support prices.” The brokerage boosted its investment rating on Mapletree Logistics Trust, an industrial landlord, and Ascott Residence Trust, a serviced-apartment operator, to “overweight” from “equal weight” because of their attractive dividend yields. Morgan Stanley cut its rating on Ascendas Real Estate Investment Trust to “underweight” from “equal weight” on high valuations, the report showed.