Brokers' take

Singapore Reits | Neutral

OCBC Investment Research, May 19

During the recently concluded Q1 2016 earnings season, all 22 S-Reits under our coverage posted results which met our expectations. However, reported distribution per unit (DPU) was largely subdued, a clear reflection of the challenging operating environment. This was partly bogged down by Reits which carried out rights issue exercises, namely OUE Hospitality Trust and OUE Commercial Reit. Even if we exclude the performance of these two Reits, DPU growth for our remaining coverage came in at only 0.5 per cent year-on-year. Besides corporate actions, we note that the industrial and hospitality sub-sectors registered relatively weak results in general. We keep Frasers Centrepoint Trust and Keppel DC Reit as our top picks. Following our downgrade of one of our previous top picks, Mapletree Logistics Trust on account of its strong share price outperformance and uncertain outlook, we replace it with Ascendas Reit.