Singapore Reits Deutsche Bank, Feb 28

Singapore Reits are the best-performing Reit market year to date globally. However, we struggle to justify outperformance given a mediocre fundamental outlook and cautious management statements coming from the recent results season. While we do expect the physical rental market to bottom out for most sectors, we see very modest distribution per unit (DPU) growth, especially as we factor in increases in interest expenses. We see acquisition, fundraising and mergers and acquisition as key catalysts and expect range trading with downside risks. We set out prospective trading ranges for Reits under our coverage; we prefer stocks that offer stable operating DPU growth.

Mapletree Commercial Trust is our top pick and we prefer CapitaLand and City Developments in the sector.