Singapore REITs - OCBC Investment 2024-02-26: Pullback Presents Buying Opportunities For Quality Names

• Following an outperformance against the broader Singapore market in 2023, the S-REITs sector has lagged year-to-date in terms of share price movement. We believe this can be attributed largely to a rebound in the 10-year US Treasury (UST) yield and the 10-year Singapore government bond yield, which in turn was driven by a push back in Fed rate cut expectations.

Yields at play again as S-REITs pullback on delayed rate cut expectations

• - Read this at SGinvestors.io -

4Q23/FY23 results review: DPU still largely declining on a y-o-y basis

• During the recently concluded 4Q23/FY23 earnings season, most S-REITs under our coverage which disclosed distribution per unit (DPU) data continued to record declines on a y-o-y basis. This was once again attributed to higher borrowing costs, an enlarged unit base and FX translation losses.
• - Read this at SGinvestors.io -
• Overall average and median DPU growth came in at -3.5% and -2.2% y-o-y respectively, for the reporting period. However, the weaker performance was largely expected, as nine out of the 13 S-REITs’ results were considered to be in-line with our expectations. 3 S-REITs missed our expectations and only one exceeded.
• We have since adjusted our DPU forecasts by -3.2% for the current financial year (FY1) and - 2.7% for the next financial year (FY2) on average, and by -2.8% for FY1 and -1.9% for FY2 on a median basis.

Softness in DPU to continue in near-term with growth to resume in next financial year

• Read more at SGinvestors.io.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2024-02-26 SGinvestors.io

---