RHB Securities 2015-08-31: The REITs Pulsebeat - Weekly Review Report (Part 2 of 3)

Singapore REIT

S-REITs Investment Thesis 


CAPITALAND COMMERCIAL TRUST - CMT (BUY, TP2.42) 


  • A disciplined and cost-conscious management team. Active leasing track record, with over 6% positive rental reversion every year post-GFC. 
  • Possible near-term cannibalisation in Jurong East. All eyes on CMT to strategise the positioning of its three malls there. 
  • Catalysts: Further sponsor injections (Westgate, Bedok Mall etc.) 
  • Risk to TP: More than expected NPI margin decline due to labour crunch and increasing costs.


FRASERS CENTREPOINT TRUST - FCT (BUY, TP 2.22) 

  • FCT is the only pure suburban retail play with strong resilience against the rise of the e-commerce business. 
  • Growth of incoming supply of suburban retail space moderating in FY15 (~5.7%) and FY16 (~2.9%), compared to FY14 (~8.5%). In addition, upcoming supply not in close proximity to FCT's malls. 
  • Catalysts: Higher than expected rental reversion driven by international retailers.Sponsor Injections.  
  • Risk to TP: Shift in preference from mall dining to online food delivery service such as foodpanda.


FRASERS COMMERCIAL TRUST - FCOT (BUY, TP 1.71) 

  • FCOT is the most resilient office REIT, with assets exposed to non-cyclical sub sectors. 
  • Expect higher rental growth rates for Grade B offices as rental spread between Grade A and B narrows. 
  • Catalysts: Higher-than-expected positive rental reversion due to low-based passing rents. 
  • Risk to TP: Foreign currency risk (AUD)


KEPPEL REIT - KREIT (Neutral, TP1.13) 

  • Completion of MBFC Twr 3 acqusition (SGD1.248b) on 16 Dec 14 from sponsor. 
  • Expiry/Depletion of rental support in 2014 (MBFC Twr 1 & 2), 2015 (OFC), 2019 (MBFC Twr 3) may cause dips in DPU. 
  • Catalysts: Better than expected office rentals pick-up. 
  • Risk to TP: Further dips in FY15-16 DPU, following the depletion and expiry of OFC rental support.


Ong Kian Lin | Ivan Looi | http://www.rhbgroub.com/ RHB Securities 2015-08-31
BUY Maintain BUY 2.42 Same 2.42
BUY Maintain BUY 2.22 Same 2.22
BUY Maintain BUY 1.71 Same 1.71
NEUTRAL Maintain NEUTRAL 1.13 Same 1.13


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