Investment Bet On Singapore Reits
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Reits still a good bet in 2011
Source: The Straits Times
Author: Yasmine Yahya
Date: 31 Dec 2010
SINGAPORE-LISTED real estate investment trusts (Reits) are shaping up to be among the top choices for investors in the new year.
Thanks to the improved economy and low interest rates, Reits have refinanced their debt and made aggressive acquisitions this year. Their overall business has also strengthened on the back of rebounding rental rates.
The FTSE ST Reits index, which measures the value of 17 Singapore-listed Reits, has jumped 10 per cent since the start of the year, outperforming the real estate developers' index's 6 per cent gain.
Almost every sub-sector of the Reit market was represented among the five highest-yielding trusts of the year, which is topped by Lippo-Mapletree Indonesia Retail Trust and followed by health-care trust First Reit, office space supplier Ascendas India Trust, industrial Reit AIMS AMP Capital and Frasers Commercial Trust.
Looking to next year, Reits are viewed as being in a strong position to continue this success story, the only fly in the ointment being the fact that their prices have increased and yields have fallen.
DBS Vickers analyst Derek Tan thinks Reits will deliver distributable income growth of 10 per cent on average next year. Debt financing should not be a problem, he said, as economists expect interest rate hikes to occur only towards the end of next year.
OCBC Investment Research analyst Ong Kian Lin agreed, noting that many Reits are taking advantage of the existing low interest rates to refinance their debt and are seeking longer debt tenures of more than three years.
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Investments Singapore
Investments Singapore