Reopening seen driving DPUs of S-REITs in 2021 2H

Maybank Kim Eng backs the reopening of Singapore as the May outbreak receded.

The Singapore real estate investment trust (S-REIT) distribution per unit (DPU) is expected to rise in the second half of the year as Singapore reopens.

“We expect S-REIT DPUs to rise at a 2-year CAGR (Compound Annual Growth Rate) of c.6%, led by a +8-20% jump for retail REITs,” the Maybank Kim Eng said in a report.

Singapore was recently placed under Phase 2 (Heightened Alert) following a rise in COVID-19 cases last May. The outbreak has since been controlled, allowing Singapore to transition to less restrictive Phase 3 (Heightened Alert).

“They have not disclosed rental waivers (to offset weaker tenant sales), but we see limited impact to DPU at 0.5-1.5%,” the report also noted.

“Retail REITs are down c.1-5% since end-Apr, and imply attractive FY21 dividend yields of 5-7%.”

S-REITS, according to Maybank, gained 2.4% month-on-month to outperform the market. It was boosted by a 20-30 basis point pull-back in the UST 10-year yield since end-Apr.

“Capital flows into yield names remain strong, underpinned by recovering cashflows and DPUs,” it said.

In addition, Maybank said sector-wide DPUs are more resilient from AUM expansion, with sound balance sheets and low interest rates supporting acquisition upside in the next 12- 24 months.

Read more from Maybank here.


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