Ahead of the earnings release for Singapore REITs starting with Ascendas REIT (A17U.SG) later today, Daiwa says it expects “a mixed bag for net-property income and distribution-per-unit growth because several S-REITs completed major acquisitions and refinancing during the quarter.”
It also expects distortions from asset refurbishments, divestments, and negative rental reversions to accelerate in the office space. “We expect the hospitality-related S-REITs to continue to record the strongest underlying DPU growth, though the pace might moderate in 2011.”
It says the 12 S-REITs under its coverage trade at a weighted average FY11 DPU yield of 5.7%.
“We maintain our Neutral view for the broad sector and continue to prefer the industrial-property and hospitality names for their above-sector average yields and positive DPU growth in the current low interest-rate environment.”
In industrial space, it rates Ascendas REIT, Mapletree Logistics Trust (M44U.SG), Cambridge Industrial Trust (J91U.SG) at Buy. In hospitality rates, Ascott Residence Trust (A68U.SG), CDL Hospitality Trusts (J85.SG) at Buy.
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