REIT is a popular category for Singaporean investors. With the Fed in the early cycle of its rate hike cycle, investors are getting worried about the prospects of the REIT they own. How should investors be investing in REITs in a rate hike environment?
As we have discussed in this column several months ago, Singapore’s real estate market seemed to have turned the corner in 2017. The enbloc transactions of residential projects suggest that developers are interested in accumulating their land bank again, and the early signs of office rental increases suggest that the general real estate market has reached an equilibrium point. As such, we have suggested that REITs and other forms of real estate may begin to see positive performance in 2018.
Investors who are looking to invest in Real Estate Investment Trusts to increase their passive income, especially so when one is looking forward to retirement and wants to ensure a steady inflow of income to sustain themselves. Investors should take a look at these three REITs in different sectors with improving prospects.
Following our first of the three-part coverage on DBS’ S-REIT roundup for Industrial REITs, we continue to look at the Retail and Hospitality REIT sectors that were covered in the DBS S-REIT investor conference.
During DBS’ recent investor conference for S-REITs, DBS notes that there is increasing interest to re-enter S-REITs at lower prices. While the market expects yields to be inching higher, the upside surprise stems from an expected rebound in rental growth rates, making it a strong case for S-REIT investments.
Spike in the 10-year bond and fears over inflation have led to a sell-off among S-REITs in recent weeks. Some investors have raised concerns that this resembles the painful memories of 2013 where S-REITs plunged 22 percent. However, in DBS’s opinion, the recent sell-off is different and largely overdone. Instead, DBS recommends investors to continue keeping faith in S-REITs and invest in them at a discount.
Following the first part of the two-part REITs Quarterly Scorecard, we continue to review the quarterly performance of three other S-REITs that have been given a BUY rating by the research houses.
With the REITs just completing its quarterly earnings release, we review the quarterly performance of the S-REITs that continue to receive a BUY rating from the research houses.
Despite the backdrop of interest rate hike cycle from the Fed, S-REITs managed to make a good year-to-date run. Total return of S-REITs was 24.9 percent year-to-date, according to CIMB. The sector’s strong performance was due to the narrowing of yield and yield spread.
As we all know, Real Estate Investment Trusts (REITs) are a specialised type of securities that invest in income-producing real estate assets well-sought after by income investors because of their relatively higher yield.