Singapore REITs - DBS Research 2021-05-17: Survival Of The Fittest

Singapore REITs - DBS Research | SGinvestors.io FRASERS LOGISTICS & COMMERCIAL TRUST (SGX:BUOU) ARA LOGOS LOGISTICS TRUST (SGX:K2LU) MAPLETREE LOGISTICS TRUST (SGX:M44U)

Singapore REITs - Survival Of The Fittest

  • Near-term pain from stricter communal measures for the long-term good of the community.
  • S-REIT share prices have reacted and are now close to the peak-to-trough declines back in 2H20 (Phase2).
  • Buy on further dips; investors should position to gather REITs within the structural growth themes of logistics, suburban retail and grade A offices.



Turning buyers on further near term weakness.

  • The introduction of stricter measures to effectively curb the community spread of COVID-19 will likely bring communal gatherings to a near-term standstill. In fact, we believe that the recent measures targeting social gatherings appear to be stricter than those implemented back in phase 2 (Jun’20-Dec’20) and should be effective.
  • S-REIT share prices have de-rated in response. That said, while average share prices are ~15% higher (for office, retail and hospitality S-REITs) compared to the lows in Oct’20, we believe that year-to-date declines of ~8-9% are within ~3% of the declines (peak-to-trough) seen back in Phase 2.
  • With average sector yields at ~6.0% (yield spread of 4.5% vs 10-year bond), we believe that believe that prices are approaching a near term bottom and should see support soon


Opportunity to gather structural growth names.


Potential risks.

  • Our views are premised on a short and sharp “lockdown” curbing the effective community spread.
  • Potential downside risk if the
    1. economy double dip into a recession in 2021, resulting in widespread business closures,
    2. mandatory mall closures which result in landlords needing to provide extended reliefs to their tenants.


Opportunity to buy strong names in a knee-jerk reaction

  • See the 12-page report attached below for complete analysis.





Derek TAN DBS Group Research | Rachel TAN DBS Research | Dale LAI DBS Research | https://www.dbsvickers.com/ 2021-05-17
SGX Stock Analyst Report BUY MAINTAIN BUY 1.850 SAME 1.850
BUY MAINTAIN BUY 0.850 SAME 0.850
BUY MAINTAIN BUY 2.350 SAME 2.350



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