OCBC Bank has reiterated a ‘Buy’ rating on Singapore-listed SPH REIT, citing its stable financial results since listing in mid-2013.
The REIT has also seen a compound annual growth rate of 0.6% in its distribution per unit (DPU) from FY14 to FY16, said the bank.
“Although this figure appears unexciting, we believe the stability offered provides defensiveness, and creates value for investors in this current lacklustre and uncertain macroeconomic climate”, the bank added.
According to figures tracked by OCBC, SPH REIT currently has the lowest gearing ratio among Singapore REITs, about 25.7% as at 31 Aug 2016.
85.9% of the REIT’s debt is also on a fixed rate basis, and it has no refinancing requirements till 2018, said the bank.
Following recent price corrections, SPH REIT is calculated to be currently trading at a forecasted yield of 5.9% for its FY17.
OCBC has revised the fair value estimate for units of the retail REIT to SGD1.06 (USD0.75), up from SGD1.05 previously.
Units of SPH REIT finished the trading day about 0.5% lower from its previous close on the Singapore Exchange to end at SGD0.95.