REITs Positioning in a Rising Interest Rate Environment
Synopsis
How will REITs perform in a rising interest rate environment? Which REITs are better positioned to ride the property upcycle? Are the Hospitality REITs poised for a turnaround?
We believe that the concerns of a rate hike on REITs performance are overblown. REITs will transition from being viewed as yield vehicles to being viewed as growth vehicles and will continue to outperform.
Singapore REIT yield spreads are among the most compelling across the region with upcycle yield spreads indicating over 20% upside potential.
We prefer exposure to the office and hospitality segments over industrial and retail segments.
We expect a rise in visitor arrivals and dwindling hotel supply will drive the Hospitality segment turnaround.
We recommend an OVERWEIGHT stance on the REITs sector with CDL Hospitality Trusts, CCT and AREIT as our top picks.
Source: UOBKH