Why SREITs seem 'oversold' in the short term

Is it still smart to invest?

According to OCBC, S-REITs appear to be oversold in the short term. While the recent market selloff of S-REITs might have taken the shine of S-REITs at the moment, we believe that this selloff has been overdone; it has not shaken OCBC's resolve that S-REITs remain attractive investments.

Furthermore, in light of the recent share price weakness, OCBC believes that even in the quagmire there is value to be found.

Here's more from OCBC:

As we shall show via several sensitivity analyses, we believe that the magnitude of interest rate hikes that is being priced into the SREITs at present is far higher than even in our most bearish market scenario.

If investors were to cherry pick wisely, certain SREITs might even present them with considerable capital upside and attractive returns.

We have identified three key focal points that we believe would be beneficial to understanding the impact of higher interest rates on SREITs.

These are the following:

Opportunity costs for investing in yield-plays

Impact on distributions from higher interest costs

Risk on NAV through cap rate expansion

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