Brokers' take

Singapore Reits | Neutral

Maybank-Kim Eng Research, May 17

CANARIES in the coal mine: Singapore Reits (S-Reits) under coverage saw their core-DPUs (distribution per unit) grow just 0.8 per cent year-on-year for Q1 2016, tapering from previous quarters of 2.4-3.9 per cent year-on-year. Organic growth was challenging as average occupancy fell, and rent reversions have steadily tapered from mid-teens to 7 per cent, offsetting growth from acquisitions. we remain neutral on S-Reits, mindful that despite uncertain fundamentals, lofty valuations are well supported by a low interest rate environment, suppressed bond yields and by extension, S-Reit yields. Top picks are Mapletree Industrial Trust and Ascendas Reit.