Analysts name this SGX-listed Reit as their 2026 pick on attractive yield, rate cut tailwinds

[SINGAPORE] Phillip Securities and RHB have named Stoneweg Europe Stapled Trust (Sert) as a preferred stock pick in their strategy outlook reports for 2026.

The pan-European stapled group was assigned a “buy” rating by both brokerages. Phillip Securities had a target price of 1.86 euros for the counter while RHB’s was 1.90 euros, representing an upside of 16.3 per cent and 18.8 per cent, respectively, from the trust’s last closing price of 1.60 euro on Monday (Jan 5).

Phillip Securities in a Monday report named Sert in its Phillip Absolute list of top 10 picks for a model portfolio for 2026. The brokerage noted that Sert – which comprises Stoneweg European Real Estate Investment Trust (E-Reit) and Stoneweg European Business Trust – is the sole Reit in the yield category.

“We find the yield attractive at 8 per cent, with dividend growth returning as debt refinancing is completed,” said Paul Chew, Phillip Securities head of research.

In a market outlook strategy report dated December, RHB named the stapled group in its list of preferred small-cap picks. The list identifies “high-quality small-cap names best positioned to benefit from renewed investor interest and structural fund inflows”.

RHB pointed to Sert’s “good mix” of logistic and prime office assets, the strength of its management team, and its under-rented portfolio of assets as part of its investment thesis for the stapled group.

Moreover, “value-added strategies” such as Sert’s data centre development fund, alongside asset redevelopment and its recycling of assets, stand to produce higher yields for the stapled group, said RHB analyst Shekhar Jaiswal.

Rate cuts as potential tailwinds for S-Reits

Sert could be a beneficiary of “expected sharp interest rate cuts” by the European Central Bank, noted RHB.

With softening inflation data in the Eurozone raising prospects for aggressive rate cuts, the brokerage has assigned overseas Singapore-listed Reits, including Sert, an “overweight” rating.

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“With more rate cuts on the cards and an improving economic outlook, this could spark a revival of some of the overseas S-Reits that have been more severely and directly impacted by the effects of higher interest rates when compared to their Singapore peers,” it said. However, RHB flagged spillover effects from the Russia-Ukraine war and a potential resurgence of inflation as risks for these Reits.

Phillip Securities concurred that further interest-rate cuts could be growth catalysts for S-Reits such as Sert.

Noting that inorganic expansion via asset recycling could also provide tailwinds for the sector, it assigned S-Reits an “overweight” rating, with a preference for the retail subsector – which is supported by continued high single-digit positive rent reversions, driven by below-average occupancy costs and limited new supply.