REITs Performance I

Due to the uncertainty surrounding the strength of the global economic recovery, the general consensus seems to be that the STI is pretty much range bound. In such an environment, stock picking becomes even more crucial in sieving out the likely outperformers.

REITs are no exception to this.

The table shows the month end prices for selected REITs with the STI as the last row for reference. To illustrate the point more clearly, a graphical form in terms of percentages is presented next.

I observed that amongst these, there were three that consistently outperformed the STI:

1. PLife
2. CDLHT
3. MLT
   

In a previous post, I had already highlighted CDLHT's potential.

MLT's strong performance could be attributed to its string of recent yield-accretive acquisitions. PLife is not so clear to me though. On 27th of August, it jumped 9c from 1.44 to 1.53 on volume of 1.262m and on 31st of August, it jumped 7c from 1.51 to 1.58 on volume of 3.48m, both days without any announcements.

Going forward, I would favour a sectorial-cum-sponsor approach in the S-REITs market.

The hospitality sector is clearly benefiting from the IR tourism effect, which could spill over into the retail sector. Industrial rents seem stable enough and office rents appear to be bottoming. As for healthcare, its rental has all along been pegged to CPI and can be seen as a defensive play.

Strong sponsors would include Capitaland, Ascendas, CDL, Keppel Land, Mapletree, F & N, Parkway, in essence all those which I deemed fit to include in the table and graph.

One last thing I would keep my eye on is the Mapletree Industrial Trust IPO planned for later this year. I would definitely subscribe for it if and when it does materialise =)