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Keppel REIT
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PiRPiR
Master |
30-Aug-2024 20:36
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https://www.theedgesingapore.com/capital/brokers-calls/sunny-days-ahead-s-reits-says-rhb-analyst-who-keeps-overweight-sector
'Sunny days ahead' for S-REITs, says RHB analyst who keeps 'overweight' on the sector , Keppel REIT, Suntec REIT, AIMS APAC REIT as its top picks. Analyst Vijay Natarajan says the recent turn of events arising from easing inflation leading to a favourable rate cut outlook have tilted the balance firmly in favour of S-REITs, which have been battered by high interest rates in the last few months. While there will be a lag effect of about 12-18 months for positive impacts to flow through to bottom lines, Natarajan expects decisive shifts in investor sentiment and early positionings to ride the upcycle. The analyst recaps the 2QFY2024 REITs results and outlook. He says that the majority of the REITs distribution per unit (DPUs) came in slightly below expectations mainly on higher financing expenses, but there were few positive surprises on stronger topline growth and better net property income margins. Forward operational guidance remains upbeat for most of the sector, with post-rent reversions expected to continue in the mid-to-high single digits for Singapore?s industrial, office, and retail sectors, he notes. Yet, one exception was the hospitality sector, where there was some caution on the revenue/available room (RevPAR) growth outlook, with a tightening of visitor spend amidst a stronger Singapore dollar and wearing off from last year?s (2H2023) high base effect, the analyst adds. Natarajan says that overall finance costs for most of the REITs are expected to increase by 5-30 basis points (bps) in 2H2024 as loans get refinanced, but most ? overall ? guided for costs to peak by 4Q2024. ?Valuations were largely stable for Singapore-centric assets, while positive surprises came from overseas markets, where valuations seem to have bottomed out and stabilised slightly earlier than our expectations ? we might see a slight rebound as early as 4Q, with rate cuts now firmly in place,? he notes. Meanwhile, the concerns over high gearing and debt refinancing have also largely abated, with valuations stabilising and refinancing secured for some of the more challenged US office REITs. Natarajan says that past cycles have shown sharp rallies during turning points in interest rates. ?S-REITs? performance has a high inverse correlation to risk-free rates, i.e. long term treasury yields, with particularly high sensitivity at turning points of the cycle,? he says. The sector saw a 15%-40% rebound in 2012, 2016 and 4Q2023, when the market saw interest rates easing, the analyst notes. S-REITs are currently trading at about 30% below 2021?s peak, and the analyst sees room for the recent rally to continue well into 4Q2024 and 2025. On valuation, the sector is trading at 0.9x P/BV (-1 standard deviation below mean) with a yield spread of about 335 bps, which is considerably higher than global peers, he continues. ?We recommend investors to adopt a slightly more aggressive stance, with a balanced mix of high-quality industrial REITs for stable yields, and office and selective overseas REITs to ride on the rebound from the turn in interest rate cycle,? says Natarajan. For office REITs, the analyst remains positive in his long-term outlook for demand for Singapore office space, with economic growth expected to pick up in 2H2024. He names Keppel REIT and Suntec REIT as top picks. On the other hand, Natarajan remains selective on retail REITs amid softening signs in retail sales and valuation grounds, and neutral on the hospitality sector. He names CapitaLand International Commercial Trust as the best proxy to retail-cum-office exposure, and Starhill Global REIT P40U -0.98% |
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Shenzhun01
Senior |
30-Aug-2024 11:31
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Trading & bid volume pretty high today...it' s moving up soon... | ||||
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petson
Master |
28-Aug-2024 17:27
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anybody know what married deal at closing? | ||||
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petson
Master |
26-Aug-2024 20:17
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yep....
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PiRPiR
Master |
22-Aug-2024 15:51
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88.5/89 | ||||
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Delvyss
Elite |
22-Aug-2024 14:32
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Receiving strong interest. MPAC showing similar signals too after being depressed for quite a long while. |
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MengKK
Member |
22-Aug-2024 12:01
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0.875 | ||||
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Delvyss
Elite |
20-Aug-2024 09:26
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Here comes .....
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Delvyss
Elite |
19-Aug-2024 15:37
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Several sessions of base building probably done. Gonna see a significant move soon. | ||||
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Delvyss
Elite |
15-Aug-2024 09:15
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An alternative to prime property. No ABSD. |
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MrBear12
Supreme |
14-Aug-2024 09:26
Yells: "Cast all our anxieties on Jesus for He cares for us" |
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Patience is forged in adversity 苦 难 生 忍 耐
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Delvyss
Elite |
14-Aug-2024 08:54
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Yea man ... patience is the right word.
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MrBear12
Supreme |
14-Aug-2024 08:46
Yells: "Cast all our anxieties on Jesus for He cares for us" |
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Slow rebuild of its true value. Needs to brew over time. Patience is the order of the day
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Delvyss
Elite |
14-Aug-2024 08:42
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" P/B ratio as of August 2024 : 0.5608"https://companiesmarketcap.com/sgd/keppel-reit/pb-ratio/#:~:text=P%2FB%20ratio%20as%20of,assets%20are%20worth%20on%20paper. |
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Delvyss
Elite |
13-Aug-2024 14:37
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Quite beaten-down price. Hope will soar big time again. https://www.keppelreit.com/#:~:text=As%20at%2031%20December%202023,as%20well%20as%20Tokyo%2C%20Japan.
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PiRPiR
Master |
06-Aug-2024 14:22
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11:57 PM EDT, 08/05/2024 (MT Newswires) -- Keppel REIT (SGX:K71U) has an average rating of outperform and price targets ranging from SG$0.84 to SG$1.16, according to analysts polled by CapitalIQ. | ||||
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PiRPiR
Master |
05-Aug-2024 23:47
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Analysts keep 'buy' on Keppel REIT for its strong portfolio occupancy, but worry about its gearing levels
Analysts from RHB Bank Singapore, Maybank Securities and OCBC Investment Research (OIR) have all kept their ?buy? calls on Keppel REIT after its 1HFY2024 ended June results, which saw a higher net property income (NPI) attributable to unitholders of $87.2 million. However, RHB?s Vijay Natarajan is lowering his target price from $1.08 to $1.05, while Krishna Guha from Maybank?s target price is unchanged at $1, and OIR?s research team has increased its target price from 92 cents to 98 cents. The REIT?s 1HFY2024 NPI growth was driven by higher occupancy from Ocean Financial Centre and KR Ginza II, as well as contributions from 2 Blue Street and 255 George Street, a Grade A office property that was acquired on May 9. Natarajan from RHB says that ?operationally, Keppel REIT?s performance continues to outperform?. The REIT has higher occupancies for the quarter, and high single-digit positive rent growth, which the analyst expects to be maintained in 2H2024. He notes that the REIT is not overly concerned about the supply and competition in Singapore, as it expects the majority of its upcoming leases to be renewed. Although there has been market talk on its tenant, BNP Paribas, cutting space from its current six floors at Ocean Financial Centre which accounts for about 3% of the REIT?s overall rental income, Natarajan believes this could be backfilled at higher rents ? considering the prime location and rise in market rents since the initial lease signing. After the completion of the REIT?s acquisition of the 255 George Street asset, which was fully funded by debt, Keppel REIT?s gearing has risen to 41.3% from 39.4% as of 1Q2024. Natarajan says that the REIT?s management would look at possible divestments in the near-term, as they aim to keep gearing below 40%. Possible divestment options include T-Tower, which was earlier indicated to be in advanced stages, as well as few of the REIT?s mature Australian assets, the analyst says. He notes that the REIT?s financing costs continue to remain a drag, with further increases anticipated in the next half of 2024 which will eventually weigh on its distribution per unit (DPU). As such, he lowers his FY2024-FY2026 DPU estimates by 2%-3%, factoring in higher interest costs, including the REIT?s joint venture associate contributions. Likewise, Guha from Maybank notes a resilient portfolio for the REIT but says to ?watch on gearing?. The analyst similarly highlights that the REIT will focus on portfolio optimisation and a strong resilient balance sheet, while management will hold back on share buybacks. Factoring in the acquisition of 255 George Street and higher occupancies in Japan and Pinnacle Office Park, Guha anticipates a DPU increase of about 1.5%. He leaves his rating and target price unchanged. OIR?s equity research team similarly notes that Keppel REIT?s Singapore asset valuations are holding up well, but points out that the group?s aggregate leverage ratio increased 1.9 percentage points to over 40% this quarter. They note the Monetary Authority of Singapore?s proposal to loosen leverage and interest coverage ratio requirements for the Singapore REITs (S-REITs) sector, which will result in improved financial flexibility in future. As such, they lower their cost of equity assumption by 15 basis points to 6.9% and raise their terminal growth rate to 1.25%, which results in an increased target price from 92 cents previously to 98 cents. Units in Keppel REIT closed 2.5 cents lower or 2.841% down at 85.5 cents on Aug 5. |
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Delvyss
Elite |
05-Aug-2024 11:21
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Interesting master plan for the southern coastline, from Pasir Panjang to Marina East. | ||||
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Delvyss
Elite |
05-Aug-2024 11:17
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Well said. Rejuvenation of the CBD: https://www.jll.com.sg/en/trends-and-insights/research/incentivising-change-spotlight-on-singapores-cbd-and-orchard#:~:text=Nearly%2060%25%20or%202.7%20million,encourage%20rejuvenation%20of%20the%20CBD.
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Alignment
Elite |
03-Aug-2024 23:26
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With the markets now pricing in three cuts with at least one being > 25bps this year and more aggressive cuts in 2025 as well, SREIT share prices have yet to reflect this new reality. At the same time, weakening US economy means perhaps those SREITs with more US exposure may see downside operational surprises. In this climate a primarily Singaporean commercial property REIT like KREIT may be the best of both worlds. |
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