Be selective of S-REITs as valuations aren’t cheap, warns OCBC

SINGAPORE (June 6): OCBC is maintaining its “neutral” recommendation on the S-REIT sector as it projects overall DPU growth for the financial year to fall.

For the S-REITs under OCBC’s coverage, overall DPU growth came in positive at 2.4% y-o-y in the Jan to March period, a reversal as compared to the five straight quarters of flat to negative DPU growth.

“Looking ahead, within our coverage, we project overall DPU growth for the current financial year to decline by a market-cap weighted average of 0.2%, partly driven by Ascott Residence’s rights issue announced in March,” says lead analyst Andy Wong in a Monday report. For the next financial year, OCBC is projecting a 2.8% growth in DPU.

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