SREIT – UBS

SREIT valuation guide

Overview
This report summarises the key statistics on valuations, performance, and capital structure of REITs listed on the SGX. We have added a new section (Table 10) on Lease Expiry profiles of SREITs. There are now 22 REITs, with a market cap of US$21.5bn. Year-to-date, SREITs have outperformed Developers by 5.3%.

Key statistics
SREITs are trading at 6.8% 2010E yield (+428bps to 10Y government bond). We expect SREIT DPU growth of 3.3% p.a. (2010-14E), with Hospitality REITs
posting the highest growth at 5.7%. Our price target implies 17.6% upside from the current share price.

Corporate news: Hotels, Retail, PLife acquisitions and Yuan de-pegging

Ibis Singapore, a three-star hotel, has been put for sale via private tender and could fetch cS$200m. The 538-room hotel is owned by the hospitality group, Accor, and LaSalle Investment Management in a 30-70 JV. Meanwhile, the Hong Leong Group CEO (Kwek Leng Beng) is working on a ‘strictly budget’ hotel concept and intends to grow this hotel segment in Singapore and Asia. In retail, the Tanglin Shopping Centre (35%-owned by M&C Hotels) is up for sale with a reserve price of S$1.25bn (S$4167psfppr). On acquisitions, PLife REIT acquired another six nursing homes in Japan for S$60.5m; Japan now comprises 29% of its assets. Finally, REITs with high China exposure are CRCT and Ascott REIT (Table 11).

Top picks: Office landlords and CDL Hospitality Trust
We like office landlords CCT and Keppel Land. We are also positive on CDL Hospitality as a beneficiary of the recovery in tourism.