According to wealth manager Q Investment Partners, Singapore’s REIT sector is currently the sixth largest in the world with sector market cap worth of US$53 billion. However, within the S-REIT space, the quality of REITs differs.
For investors who are looking to invest in the top-notch REITs, there are three S-REITs that you should consider: Ascendas REIT (A-REIT), CapitaMall Trust and Mapletree Industrial Trust. Among the S-REITs, these three REITs have been identified as the top REITs to own.
Investors Takeaway: 3 Top REITs That Every Investor Should Own
- Ascendas REIT
According to DBS, A-REIT’s profile and performance make it one of the must-haves among S-REITs. Priced at a premium to its book value of value, A-REIT is projected to offer a steady one percent growth in DPU backed by a solid portfolio with the ability to embark on earnings accretive acquisitions.
The key attractiveness for A-REIT is its focus on the business park space. 37 percent of its earnings come from the business park space segment. DBS notes that this segment is in a strong position to capture the changing needs of doing business in the “New Economy”. With around 12 percent of its vacant space to re-let and potential inorganic growth opportunities, DBS foresees ample growth opportunities for A-REIT.
A-REIT has also been expanding its footprint in the UK market to deliver another leg of growth for the REIT. The UK market has a similar risk-reward profile as Singapore with the freehold nature of land tenures being a major positive compared to Singapore. Going forward, the manager intends to have 20-30 percent of its exposure in overseas markets, which would infuse the REIT with improved diversity and earnings stability.
BUY, TP $2.95; Current share price $2.55
- CapitaMall Trust
Among the retail REITs, CapitaMall Trust is CIMB’s preferred pick for the sector. CIMB notes that the opening of the new Funan mall will breathe life into CapitaMall Trust and fuel its growth in the next two years. CIMB expects Funan to perform relatively well given that it will be the first offline-online mall in Singapore. The mall will feature technologies such as smart car parking, hands-free shopping, in-mall robot for click-and-collect service, and a 24-hour drive through click & collect. It will also offer facilities such as a live performance theatre, an indoor cycling path, an eSports Zone, a futsal court and the largest indoor rock-climbing facility in the CBD area.
Besides redeveloping Funan into an offline-online mall, CapitaMall Trust has also recently converted 11,000 square feet of space in Plaza Singapura into Singapore’s first “phy-gital” multi-label concept store. This was branded as Nomadx, which offers a new blend of physical and digital shopping experiences. With CapitaMall Trust at the forefront of the industry, CIMB believes it will learn ahead of its peers and remain competitive.
BUY, TP $2.28; Current share price $2.24
- Mapletree Industrial Trust
According to DBS, Mapletree Industrial Trust’s strategy to buildout HiTech industrial properties has helped to enhance its earnings resilience. Over the past few years, the weak industrial property market in Singapore has been a drag on Mapletree Industrial Trust’s earnings. But as Mapletree Industrial Trust completes a few asset enhancement initiatives to grow its HiTech segment, operating metrics and cashflows are expected to improve.
Mapletree Industrial Trust has shown a strong ability to offer consistent earnings growth, which is a valued trait in the REIT space. Moving forward, DBS believes Mapletree Industrial Trust can continue to maintain its current valuations given its ability to deliver steady earnings. Moreover, the manager has also shown a knack for well-timed acquisitions as part of constant upgrade and refresh of its portfolio that makes Mapletree Industrial Trust resistant to business cycle fluctuations.
BUY, TP $2.22; Current share price $1.89