Singapore REITs - DBS Research 2022-10-05: Down But Not Out

• Sept 22 was a bruising month for S-REITs, which were down by ~7.3%, underperforming the Straits Times Index (STI).
• - Read this at SGinvestors.io -
• 10-year US and SG yields spike by more than 50bps within the month and now sit at multi-year highs of ~3.8% and 3.5%, respectively, and are approaching peaks, in our view.

S-REITs valuations are attractive; what catalysts are we anticipating?

• S-REITs' valuations are more palatable, with P/B and yield now above the mean at ~0.98x and 6.6%, respectively. On an individual REIT basis, we found that S-REITs are flirting between the low levels seen between the “2013 taper tantrum days” and since 2010.
• - Read this at SGinvestors.io -
• We also see value emerging for industrial S-REITs (Mapletree Logistics Trust (SGX:M44U), Mapletree Industrial Trust (SGX:ME8U)) whose yields are at a 5-year high.
• Hospitality S-REITs (CDL Hospitality Trusts (SGX:J85), CapitaLand Ascott Trust (SGX:HMN)) are poised to deliver outstanding results, which we believe will surprise on the upside.
• With China potentially re-opening, there could be an opportunity to relook at CapitaLand Integrated Commercial Trust (SGX:C38U), given it is trading close to March 2020 lows, at ~9%.

Can yield spreads remain tight?

• Read more at SGinvestors.io.

Derek TAN DBS Group Research | Rachel TAN DBS Research | Dale LAI DBS Research | https://www.dbs.com/insightsdirect/ 2022-10-05 SGinvestors.io

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