Ascott REIT's property in Singapore, Ascott Raffles Place. (Photo: REITsWeek)Ascott REIT's property in Singapore, Ascott Raffles Place. (Photo: REITsWeek)

OCBC Investment Research has issued a ‘Buy’ rating on two Singapore-listed hospitality stapled securities, and a hospitality REIT, citing attractive price levels despite prevailing headwinds in the sector.

The counters are namely CDL Hospitality Trust, OUE Hospitality Trust, and Ascott Residence Trust (Ascott REIT).

The ‘Buy’ ratings were made in an investment report published by OCBC Investment Research on 21 November.

The bank noted that for the hospitality counters it covers, DPU growth for the reporting period of 3Q 2016 saw year-on-year DPU growth of between -2.5% to -7.4% after adjusting for one-off items, and equity financing.

Correspondingly growth in revenue per available room (RevPAR) came in between -5.8% to -7.8% year-on-year in 3Q16, with continued decline expected, given a forecasted 6.1% growth in hotel rooms in the country, said the bank.

“While we expect single-digit RevPAR declines next year, current price levels look very attractive for some of the REITs under our coverage”, it added.

OCBC Investment Research has given a fair value estimate of SGD1.24, SGD1.48, and SGD0.73 on Ascott REIT, CDL Hospitality Trust, and OUE Hospitality Trust respectively.

The counters last changed hands on the Singapore Exchange at SGD1.11, SGD1.30, and SGD0.64 respectively.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.