Health-care Reits
There are two health-care Reits listed here: - Parkway Life Reit and First Reit.
Parkway Life Reit has increased 9.6% in value since the start of the year, while First Reit has rised 9 %.
Analysts believe they will only keep gaining strength. Both Reits have a long term lease structure, 100% commited occupancy and stable and sustainable revenue and dividend payout.
Furthermore, a majority of their leases come with a rental escalation clause that is pegged to the inflation rate.
Investors to increase their exposure to First Reit, following the release of its strong third-quarter results. The trust's recently acquired properties, the Mochtar Riady Comprehensive Cancer Centre in Indonesia and the Sarang Hospital in South Korea, are still under-utilised, which indicates future topline growth.
Office Reits
Even though the prices of office Reits have declined 20% this year, most analysts are still rather bearish on the sub-sector, as the outlook for office rentals is not very bright.
They expect rents to stay flat from now till 2013, especially for the Grade A space, supported by recent signed leases and checks with the office Reits, which are not looking to cut rents at this stage.
If you really must invest in office Reit, advises that you stick to those with mainly prime Grade A offices in their portfolios.
We believe that longer term fundamentals remian intact, especially for Grade A buildings, as $10 to $11 psf rents today are still a 40 to 50 % discount to 2008's $18.40 peak.
Also Singapore still appears attractive as an office location, as rent are still 50% below those of Hong Kong.
Credit Suisse is most optimistic about CapitaCommercial Trust and K-Reit Asia.
RBS has a "buy" call on Suntec Reit as they expect Suntec Reit to announce its plans to refurbish Suntec
City Mall by year end and this as a strong short-term catalyst for the stock.
CIMB is bullish on Mapletree Commercial Trust. As its largest asset, an under-rental VivoCity should provide strong impetus for future growth.
Industrial Reits
It have surpassed the peaks seen in 2007 and are at 10-year highs. Its believe that the upside is limited from here on, given the moderating economic growth outlook, Singapore's high exposure to the US and European economies and the appreciating currency which will reduce Singapore's competitiveness as an industrial location of choice.
Nonetheless, it bullish on one industrial Reit: Mapletress Logistics Trust (MLT).
They believe the stock is less susceptible to a slowdown in Singapore economy, given that over 50% of its net property income is derived from overseas assets.
MLT also has a strong acquisition pipeline from its parent, Mapletree Investments, worth $1 billion, which can potentially boost MLT's asset base by 25%.
Deutsche Bank has a "buy" call on Mapletree Industrial Trust, with analyst saying that the trust's solid second quarter results reflected firm underlying growth trends, despite econmic uncertainties. We still like MIT's strong organic growth proposition and attractive yield.
OCBC has a "buy" callon Cache Logistics Trust, citing it's healthy debt level and rising warehouse rentals.
Consultancy said average island wide monthly gross rents for warehouses rose by up to 3.6% quarter-on-quarter in the three months to September. This supports our view that Cache is relatively well-protected from the market downturn and negative rental reversions, even when the leases come due.
Retail and hospitality Reits
Though the economy may be going through uncertain times, analysts are largely positive on retail and hospitality Reits, as they expect tourist arrivals to remian strong.
Do not expect a repeat of 2009 in terms of tourist declines just yet with regional economies still expected to grow, albeit slower, and tourist arrivals in past months still fairly unscathed.
CIMB is most bullish on Fraser Commercial Trust and CDL Hospitality Trust over the long term.
Daiwa has a "buy" call on CDL Hospitality, that his forecasts for the trust's distribution per unit for next two years are higher than other analysts' projections.
RBS count CapitaMall Trust CMT as one of his top two picks of all the S-Reits. Like CMT's portfolio of quality malls which believe can provide a steady and resilent stream of income. CMT also has the ability to extract more growth through asset enhancement projects, example, it is refurbishing Iluma and this should help to improve the mall's (rental) yield to 5.8% from the current 3.8%.
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