Singapore REITs - UOB Kay Hian 2021-01-11: Laggard S-REITs Have Potential To Outperform

Singapore REITs - UOB Kay Hian Research | SGinvestors.io ARA LOGOS LOGISTICS TRUST (SGX:K2LU) FAR EAST HOSPITALITY TRUST (SGX:Q5T) SUNTEC REAL ESTATE INV TRUST (SGX:T82U) LENDLEASE GLOBAL COMMERCIAL REIT (SGX:JYEU) UNITED HAMPSHIRE US REIT (SGX:ODBU)

Singapore REITs - Laggard S-REITs Have Potential To Outperform




Blue-chip S-REITs have already outperformed.

  • Blue-chip S-REITs have large market capitalisation, high trading liquidity and are included in major indices. They usually lead the market during the up-cycle. They are backed by branded sponsors, such as CapitaLand (SGX:C31) and Mapletree. Their positive attributes are well recognised and appreciated by investors and they trade at lower distribution yields and usually at significant premiums to NAV.




Laggard S-REITs could play catch-up.

  • Laggard S-REITs follow blue-chip S-REITs after a time lag. They have smaller market capitalisation, lower trading liquidity and are usually not a component stock of major indices. They are underappreciated by many investors even though the quality of their real estate portfolios could be comparable to blue-chip S-REITs. Thus, they trade at higher distribution yields and larger discounts to NAV.


Latching on laggard S-REITs.



ARA LOGOS Logistics Trust (BUY/ Target Price: S$0.85)



Far East Hospitality Trust (SGX:Q5T) (BUY/ Target Price: S$0.74)



Lendlease Global Commercial REIT (BUY/ Target Price: S$0.97)



Suntec REIT (BUY/ Target Price: S$1.75)

  • Sustaining positive rental reversions. Suntec City Office is expected to maintain positive rental reversion as the average expiring rent is low at S$8.76psf pm for 2021. The return of employees to their offices and convention attendees will improve shopper traffic and tenant sales at Suntec City Mall.
  • Development projects starting to contribute. 9 Penang Road in Singapore (30% stake), 477 Collins Street in Melbourne (50% stake) and 21 Harris Street in Sydney (100% stake) will make full-year contributions in 2021.
  • Maiden acquisition in the UK. Suntec REIT's newly-acquired Nova Properties is located at Victoria (opposite the Victoria Station), the West End of London, and provides an NPI yield of 4.6% and long WALE of 11.1 years.
  • Our target price of S$1.75 is based on DDM (cost of equity: 6.5%, terminal growth: 1.0%).
  • See Suntec REIT Share Price; Suntec REIT Target Price; Suntec REIT Analyst Reports; Suntec REIT Dividend History; Suntec REIT Announcements; Suntec REIT Latest News.

United Hampshire US REIT (BUY/ Target Price: US$0.92)



S-REITs sector catalysts

  • Environment of persistently low interest rates, which keeps investors’ interest fixated on yield plays, such as S-REITs.
  • Limited new supply for office, logistics and retail segments in 2021.







Jonathan KOH CFA UOB Kay Hian Research | Peihao LOKE UOB Kay Hian | https://research.uobkayhian.com/ 2021-01-11
SGX Stock Analyst Report BUY MAINTAIN BUY 0.85 SAME 0.85
BUY MAINTAIN BUY 0.740 SAME 0.740
BUY MAINTAIN BUY 1.750 SAME 1.750
BUY MAINTAIN BUY 0.970 SAME 0.970
BUY MAINTAIN BUY 0.920 SAME 0.920



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