Overview of the Report
The latest research by CGS International dives deeply into the performance and outlook of Singapore Real Estate Investment Trusts (SREITs). This report provides comprehensive financial summaries, insights into operational metrics, and forward-looking recommendations for key players in the SREIT space. Covering hospitality, industrial, office, retail, and overseas-centric SREITs, the analysis highlights trends, challenges, and opportunities for investors.
OUE REIT: Unlocking Value Amid Challenges
OUE REIT has been navigating a complex market environment, reporting a 2H24 distribution per unit (DPS) of 1.13 Singapore cents and a FY24 DPS of 2.06 cents. While this is largely in line with expectations, it reflects a slight decline of 1.4% year-on-year. The REIT’s net property income (NPI) dropped by 2.3% year-on-year to S\$116.9 million, primarily due to higher utility costs and property taxes for its Singapore hotels.
Despite these challenges, OUE REIT achieved positive rental reversions of +10.7% in FY24, buoyed by tenants returning to office spaces and demand for subdivided space. The Mandarin Gallery performed exceptionally well with a +19.8% rental reversion and occupancy of 98.2%. Moreover, its two Singapore hotels registered a 9.2% year-on-year increase in revenue per available room (RevPAR). However, the divestment of Lippo Plaza Shanghai for S\$357.4 million has created an income gap, leading to a reduction in DPS forecasts for FY25-27.
Recommendation: Hold, with a target price of S\$0.32.
CapitaLand Ascott Trust: Resilient Hospitality Play
CapitaLand Ascott Trust (CLAS) continues to showcase resilience in the hospitality sector. Trading at S\$0.88, it offers an attractive dividend yield of 7.0% for FY24F. The REIT’s ability to maintain stability in a volatile market is underscored by its diversified portfolio and strategic acquisitions. Analysts recommend an Add rating, with a target price of S\$1.18, highlighting its strong growth potential.
CDL Hospitality Trust: Poised for Recovery
CDL Hospitality Trust (CDREIT) is gradually recovering from the pandemic-induced downturn. With a dividend yield of 6.2% for FY24F, it benefits from increasing travel demand and a rebound in global tourism. Trading at S\$0.87, the REIT is rated as Add with a target price of S\$1.16, reflecting optimism about its growth trajectory in the coming years.
Far East Hospitality Trust: Stable Growth
Far East Hospitality Trust (FEHT) remains a stable performer in the hospitality space. At a price of S\$0.61, it offers a consistent dividend yield of 6.9% for FY24F, FY25F, and FY26F. Analysts have assigned an Add rating with a target price of S\$0.78, expecting steady growth driven by its strategic assets and operational efficiency.
Industrial SREITs: Growth Amidst Challenges
AIMS AMP Capital Industrial REIT
Trading at S\$1.27, AIMS AMP Capital Industrial REIT offers a compelling dividend yield of 7.4% for FY24F. The REIT benefits from a diversified industrial portfolio and strategic acquisitions. Analysts recommend an Add rating, underscoring its strong fundamentals.
CapitaLand Ascendas REIT
CapitaLand Ascendas REIT (CLAR) remains a heavyweight in the industrial sector. With a dividend yield of 6.0% for FY24F, the REIT continues to deliver stable returns. Trading at S\$2.58, it is rated as Add with a target price of S\$3.23, reflecting confidence in its growth strategy.
ESR-REIT
ESR-REIT is another strong player in the industrial sector. Offering a high dividend yield of 8.2% for FY24F, it trades at S\$0.26. Analysts have assigned an Add rating, citing its robust portfolio and strategic initiatives.
Office SREITs: Stability in Uncertain Times
Keppel REIT
Keppel REIT is well-positioned in the office space, offering a dividend yield of 6.9% for FY24F. Trading at S\$0.86, it is rated as Add with a target price of S\$1.15, supported by its strong tenant base and strategic locations.
Suntec REIT
Suntec REIT offers a dividend yield of 5.1% for FY24F and trades at S\$1.21. Despite challenges in the office segment, it is rated as Hold with a target price of S\$1.38, reflecting cautious optimism about its recovery.
Retail SREITs: Resilient Amidst Change
CapitaLand Integrated Commercial Trust
CapitaLand Integrated Commercial Trust (CICT) continues to lead in the retail space. With a dividend yield of 5.6% for FY24F, it trades at S\$1.94. Analysts recommend an Add rating with a target price of S\$2.45, highlighting its strong portfolio and tenant mix.
Frasers Centrepoint Trust
Frasers Centrepoint Trust (FCT) remains a key player in retail. Offering a dividend yield of 5.7% for FY24F, it trades at S\$2.12. Analysts have assigned an Add rating with a target price of S\$2.68, reflecting confidence in its growth potential.
Overseas-Centric SREITs: Expanding Horizons
CapitaLand China Trust
CapitaLand China Trust (CLCT) offers a high dividend yield of 8.4% for FY24F, trading at S\$0.73. Analysts highlight its strong presence in China and have assigned a Neutral rating, citing potential headwinds in the Chinese market.
Elite UK REIT
Elite UK REIT remains a standout performer with a dividend yield of 9.1% for FY24F. Trading at S\$0.31, it is rated as Add with a target price of S\$0.34, driven by its stable UK portfolio and strategic acquisitions.
Healthcare SREITs: Defensive Play
Parkway Life REIT
Parkway Life REIT (PREIT) offers a defensive investment option with a dividend yield of 3.9% for FY24F. Trading at S\$3.88, it is rated as Add with a target price of S\$4.91, reflecting its resilience and stable returns.
