Is it time to buy Singapore REITs?

SINGAPORE (Nov 18): Singapore real estate investment trusts (REITs) have seen price-to-book fall to 0.9x to reach prior lows set in August last year.

“Significantly, Singapore REITs also look attractive when comparing current dividend yields to bond yields with a gap of 3.84%,” say Credit Suisse lead analyst Sakthi Siva in a Wednesday report.

“This 3.84% gap is more than double the 1.67% gap for MSCI Asia ex-Japan REITs,” Siva adds.

However, Credit Suisse stresses that valuations such as previous lows on price-to-book and dividend yields versus bond yields only provide a “rough guide”.

“Stock prices could easily overshoot previous troughs if the sell-off in bonds proves to be more severe than anticipated,” says Siva.

In addition, the analyst adds that corporate fundamentals could be worse in Singapore, with falling property prices and rising vacancy rates.

Given the poor retail outlook, Credit Suisse Singapore REITs analyst Nicholas Teh believes fundamentals are better for Mapletree Commercial Trust and Ascendas REIT.

As at 4.48pm, Mapletree Commercial Trust is trading half a cent lower at S$1.44, while Ascendas REIT is trading 1 cent higher at S$2.32. — theedgemarkets.com.sg