Dec 8, 2016
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S-REITs’ DPU growth moderated in the first nine months of 2016, with some even posting a negative growth, reported Singapore Business Review, citing an OCBC Investment Research report.

“Within our S-REITs sector coverage, overall DPU growth for 9MCY16 came in at -0.4 percent on a year-on-year basis. If we take into account significant one-off items, adjusted DPU would instead have declined by 0.5 percent year-on-year, based on our estimates,” said the research house.

It attributed the softer performance to higher operating costs, slowing rental reversions, dilution resulting from equity fund raising exercises as well as issuance of units as payment of management fees.

Looking ahead, OCBC Investment Research expects the unfavourable demand and supply dynamics to persist across the various sub-sectors in 2017.

“Coupled with sluggishness in the macroeconomic environment, headwinds would continue to impact the performance of S-REITs, in our opinion,” it said.

“However, this would be partially buffered by rental leases which have been locked in with tenants for a period of time, thus providing some resilience to the income streams of REITs.”

The research house also believes that REIT managers have adopted prudent measures aimed at managing their interest rate and foreign exchange risks.

 

Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.

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