S-Reits may be in for near-zero total returns until end-16: OCBC
Research report urges caution, citing harsh impact of rising interest rates and falling distribution growth
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OCBC Investment Research released a controversial report on Tuesday urging real estate investment trust (Reit) investors to reallocate their capital as they may reap almost zero total returns from now until end-2016. Much worse, they may even suffer a rapid initial capital loss as prices fall, before subsequently recovering to par on dividend gains.
This comes as its in-depth quantitative analyses illustrate the harsh impact of rising interest rates and declining distribution per unit (DPU) growth. This has turned the risk-reward of the Singapore Reit (S-Reit) sector unfavourable, it said.
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