How S-REIT stocks are affected by Fed's delayed tapering

Should investors be spooked?

According to CIMB, while the Fed tapering is delayed, interest rates remain on an upward bias. S-REIT yields could compress with the 10YSGB but investors should be mindful that S-REITs typically do not perform well in a climate of interest-rate uncertainty.

"We think that it is not where rates are at, but rather when will they stabilise and at what levels," CIMB said.

Here's more from CIMB:

S-REITs trade at c.396bp spread over the 10YSGB, 1x P/BV and FY14 yields of 6.3%, within the historical average – not cheap but also not expensive. For now, S-REITs look like a good trade, with those that de-rated the most in the last three months could also rebound the most.

Our preference remains in the developer space, where a diversified structure and much cheaper valuations (30% discount to RNAV in the sector, c.0.5 s.d. below mean) allow for more downside protection.

Firmer S-REIT share prices and more stable interest rates are also conducive for asset recycling growth. We see developer stocks as cheaper proxies to near-term asset reflation.

Also Read

One Sophia sells 30% of units at weekend launch

Turf City sites could deliver up to 800 public housing units: Huttons

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit