JPMorgan says “2011 will likely be a volatile year for S-REITs sector with a total return expectation of 8.0%, dominated largely by the dividend yield.”
It notes this compares with its return expectation of about 15% for the STI. It says while rental growth expectation for most commercial segments remains positive and physical market transactions will continue to pick up, the potential supply in the equity market through primary and secondary issuances will keep unit prices in check.
It notes this compares with its return expectation of about 15% for the STI. It says while rental growth expectation for most commercial segments remains positive and physical market transactions will continue to pick up, the potential supply in the equity market through primary and secondary issuances will keep unit prices in check.
It adds, valuations are no longer compelling as S-REITs are trading at a forward dividend yield of 6.0%, P/B of 1.1X and 7.5% premium to house NPV estimates. It downgrades CapitaCommercial Trust (C61U.SG) to Underweight vs Neutral on lack of growth, deteriorating portfolio quality and rich valuation.
It also cuts CapitaMall Trust (C38U.SG) to Neutral vs Overweight "as we believe that constant cash calls from the sector would put pressure on the stock.
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