3 S-REITs to ‘buy’ in a slower growth environment

SINGAPORE (Jan 12): HSBC Global Research expects to see a “relatively uneventful reporting period” as Singapore REITs (S-REITs) gear up to report their financial results for the quarter ended Dec 2016 over the coming weeks.

Nonetheless, the research house is remaining constructive on S-REITs on the expectations of 10-year US Treasury bond yields declining to 1.35% by end-2017.

“Sector distribution per unit (DPU) yield is 6.2% with spread over 10-year SG bond yield at c380bps. The 10-year SG bond yield is 2.45% and in our view, the S-REIT sector is pricing in a 10-year SG bond yield of c2.9-3.0% based on DPU yields and spreads,” observes Pratik Burman Ray, a senior property analyst at HSBC, in a Wednesday report.

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