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S-REITs    OVERWEIGHT

S-REITs Bi-Weekly Updates (1-15 November 2021)

  • FSTREI gained 0.1% in the past two weeks.

Easing of restrictions on dining in will increase shopper traffic at retail malls. The government has initiated a series of easing of restrictions as the week-to-week ratio of community cases has fallen below 1.0x. Five fully vaccinated members of the same households are allowed to dine-in at F&B establishments since 10 Nov 21. The same concession was subsequently extended to hawker centres and coffee shops.

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Calibrated and gradual reopening of international borders. Singapore will launch quarantine-free vaccinated travel lanes (VTL) with Malaysia (flights between Changi Airport and KL International Airport), India (two daily flights from Chennai, Delhi and Mumbai) and Indonesia (two daily flights from Jakarta) starting 29 Nov 21. Singapore will have 21 VTLs by 6 Dec 21. The overall daily quota of arrivals was increased from 6,000 to 10,000. The land border between Singapore and Malaysia is expected to re-open within the next few weeks.

Top outperformer: CDREIT gained 5.8% due to the addition of more VTLs. SASSR gained 4.7% as 3Q21  DPU grew 3.8% yoy and it benefits from the strength of the renminbi. KREIT gained 2.7% as the risk of a merger with SPH REIT dwindled due to Cuscaden Peak’s improved offer for Singapore Press Holdings. LREIT gained 2.3% due to a turnaround to positive rental reversion for 313@Somerset in 1QFY22.

Top underperformer: Blue chip S-REITs sustained light profit-taking. MCT, MINT, FCT, MLT and KDCREIT corrected slightly by 3.2%, 2.5%, 2.5%, 1.5% and 1.3% respectively.

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Maintain OVERWEIGHT. Restrictions are gradually being eased as the week-to-week ratio of community cases has fallen below 1.0x. The government is also adding more VTLs and increasing the VTL quota. The calibrated easing of border restrictions will rebuild Singapore as an aviation hub. We focus on reopening plays. BUY hospitality REITs ART (Target: S$1.20) and FEHT (Target: S$0.71). BUY retail REITs FCT (Target: S$2.98) and LREIT (Target: S$1.03).