InvestIdeas

Chart of the Day: Office supply pipeline could hit 704,000 sqft in 2019
https://sbr.com.sg/commercial-property/ ... ft-in-2019


CBD Grade A office rents surged 14.9% in 2018
https://sbr.com.sg/commercial-property/ ... 49-in-2018

Singapore REITs: A shelter for the doves and uncertainties

The 24 S-REITs under our coverage largely turned in a healthy performance for the recently concluded 4QCY18 results season, delivering average DPU growth of 2.1% on a YoY basis.

Looking ahead, we are projecting FY19F DPU growth to come in at 1.9% (market-cap weighted). This is expected to continue in FY20F, with projected DPU growth of 2.4%.

While valuations leave nothing to be excited about at this level, in our view, we remain constructive on the near-term trading performance of S-REITs.

This would be underpinned by continued benign expectations of the rate hike trajectory by the Federal Reserve in 2019.

Maintain NEUTRAL. Our longer term preferred picks are still Keppel DC REIT [BUY; FV: S$1.60] and Frasers Centrepoint Trust [BUY; FV: S$2.50]. We add Ascott Residence Trust [BUY; FV: S$1.25] as a replacement for FLT.

Maintain NEUTRAL with preferred picks Keppel DC REIT [BUY; FV: S$1.60] and Frasers Centrepoint Trust [BUY; FV: S$2.50] as well as Ascott Residence Trust [BUY; FV: S$1.25].

Source: OCBC

Big Box in Jurong East becomes ghost town as mall put up for sale
https://mothership.sg/2019/05/big-box-j ... all-empty/

Singapore's prime office rents up 23.7% in Q1
https://sbr.com.sg/commercial-property/ ... -237-in-q1

Singapore REITs: Potential re-rating catalyst?

On 2 Jul, MAS published a consultation paper on the S-REITs sector.

The main consideration surrounds the leverage limit for S-REITs, which currently stands at 45%.

MAS is reviewing this so as to provide REITs with better flexibility to optimise their capital structure. However, MAS also recognises that safeguards must be put in place.

One possible approach is to allow REITs to take on higher leverage only if they are able to meet a minimum interest coverage ratio (EBITDA excluding fair value changes divided by interest expense).

We believe the move to improve flexibility for S-REITs would be a re-rating catalyst for the sector if implemented, provided that REIT Managers remain prudent on their capital management.

Based on the S-REITs under our coverage, average interest coverage ratio was healthy at 5.2x, as at 31 Mar 2019 (range from 2.5x to 12.9x).

We maintain NEUTRAL on the S-REITs sector for now on valuation grounds.

Source: OCBC

Chart of the Day: Industrial rents down 1% to $1.98psf in Q2
https://sbr.com.sg/commercial-property/ ... 8psf-in-q2

Marina Bay will account for most of its stock

This chart from Edmund Tie & Co. (ET&Co) shows that the office supply pipeline in the CBD area will amount to 3.3 million sqft from Q3 2019 to 2022, with Marina Bay accounting for most of its stock.

The figure is about 50% lower than the three and five-year average annual net supply of 2.1m sq ft and 1.7m sqft respectively.

In a separate report from Colliers, grade A office stock in the CBD totalled 25.1 million sqft in Q1.

In addition, ET&Co stated that rents in CBD have also went up. This is led by Marina Bay where average monthly gross office rents of grade A+ rose 2% QoQ to $13.10 psf. Raffles Place saw its grade A office rents climb 1% to $11.35 psf. Grades A+, A and B rents in Shenton Way/Robinson Road and Tanjong Pajar edged up 1%, 0.5% and 0.5% respectively.

The report added that rental rates are expected to rise by 5% to 9% in 2019.

Source: Singapore Business Review

https://sbr.com.sg/sites/default/files/ ... day_29.jpg

Office rents rise 1.3% in 2Q2019, vacancy rate falls to 11.5%
https://www.edgeprop.sg/property-news/o ... -falls-115

not vested

Singapore REITs: When it rains (again), open the REITs umbrella

For the recently concluded 2QCY19 earnings season, out of the 20 S-REITs under our coverage, 15 met our expectations, 1 beat (ESR-REIT) and 4 missed.

DPU growth on a market-cap weighted basis came in at +1.3% YoY.

Office REITs saw healthy rental reversions during the quarter, although corporate expansion seems to have slowed.

Meanwhile, retail REITs continued to showcase resiliency.

Hospitality REITs had a poor quarter, while industrial REIT’s performances continue to be mixed, with downside risks to near-term prospects.

Demand for REITs remains fluid, as many countries have now embarked on monetary easing, while the ‘flight to safety’ theme also continues.

We maintain NEUTRAL on S-REITs.

Our top picks are Keppel DC REIT (KDCREIT SP) [BUY; FV: S$1.93] (strong inorganic growth potential), Mapletree North Asia Commercial Trust (MAGIC SP) [BUY; FV: S$1.43] (resilient operations), and Suntec REIT (SUN SP) [BUY; FV: S$2.07] (compelling value relative to peers).

For investors looking within the small-mid-cap space, we like ESR-REIT (EREIT SP) [BUY; FV: S$0.58] and Starhill Global REIT (SGREIT) [BUY; FV: S$0.81].

Source: OCBC

Chart of the Day: Business parks' vacancy rate eases to 14% in Q2
https://sbr.com.sg/commercial-property/ ... s-14-in-q2