Retail real estate investment trusts (Reits) earnings in Singapore will continue to surge in the coming months, attributed to positive consumer confidence, said DBS.
“With earnings forecasted to be growing steadily and supported by an expected strong S$, we believe that S-Reits continue to offer a compelling investment proposition for income investors,” it said.
DBS noted that S-Reits should continue to bring earnings growth in the next few quarters, on the back of sustained positive consumer sentiment. Even during an economic downturn, exposure of retail Reits in necessity shopping like supermarkets and F&B outlets have kept earnings stable.
“Current global economic uncertainties and volatile market conditions has made investors to look towards equities that offer stable returns and S-Reits, in our view, fit that criteria perfectly. S-Reits offer currently offer a prospective FY12 yield of 6.5 percent – which is over 500 bps spread above the long-term government bond.”
Meanwhile, industrial S-Reits also provide strong stability and visibility, with a large proportion of their income coming from master-lease structures.
“While we continue to see Hospitality Reits delivering good numbers going into a seasonally busier 2H11, we believe that growth momentum should be slowing down given a higher base effect,” added DBS.
It stressed that S-Reits earnings have proven to be fairly defensive and are “expected to continue growing, while a strong S$ and supported by a low interest rate environment are key attributes that we believe will continue to support investor interests in the sector going forward.”
To contact the journalist, you may send your message to editor@propertyguru.com.sg