Singapore REITs face increasing risks as acquisition prospects getting challenging, while upside for unit prices may be limited with upcoming IPOs like Mapletree Commercial Trust, Sabana REIT possibly drawing investors’ attention away from existing plays, says CIMB.
Expects asset prices to rise amid intensifying competition from funds, other property investors. Says lack of accretive assets in Singapore could drive REITs to buy abroad, exposing them to FX uncertainties, higher taxes.
Expects asset prices to rise amid intensifying competition from funds, other property investors. Says lack of accretive assets in Singapore could drive REITs to buy abroad, exposing them to FX uncertainties, higher taxes.
Adds, assets with limited operation histories unlikely to be accretive in short term without income support from REITs’ vendors. Also flags prospect of more cash calls as most REIT managers unlikely to opt for long-term gearing ratios of over 45%. Cites Cache Logistics Trust (K2LU.SG) as top pick for 8.3% yield, undemanding valuations.
Suggests avoiding CapitaMall Trust (C38U.SG) given limited growth catalysts for next 2 years, significant capex needs.
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