Monday, December 23, 2013

Industrial REITs - Navigating through murky times (DBSV)

Industrial REITs - Navigating through murky times

■ Industrial landlords to ride out operational challenges well
■ Reversions to remain positive, buffered by low expiring rent levels; retention rates expected to remain high
■ We pick MINT for superior growth profile; Cache for high yields

Challenges ahead given significant supply outlook
The industrial sector performed better than expected in 2013, as demand growth kept up with supply completions. As a result, rental and capital values inched up, albeit at a more moderate rate of 5-7%. Looking ahead, we see outlook turning modest, owing to a significant supply pipeline of 51.8m sqft (+12% supply expansion) of industrial space currently under construction/planning, which is projected to be completed over 4Q2013-2015.


Growing demand and high pre-commitments to limit downside in rents
While supply growth is significant, we believe that earnings downside is mitigated by an estimated c.70% of the space already pre-committed or to be filled given a brighter economic outlook. Demand for space will likely come from firms looking to consolidate or expand operations to a single base, with an aim to improve production efficiency. In addition, firms that invested significantly in capex are also likely to prefer to renew leases. This is expected to limit declines in spot rents to c.3- 5% over 2014-2015, amid a 2-ppt rise in vacancy rates.

Industrial landlords see minimal earnings risks as reversions to remain positive
We expect landlords to be realistic in their rental expectations and thus, retention rates should remain fairly high. Rental reversions are likely to remain positive, buffered by low expiring rents which are estimated to be c.7-15% below market levels. As such, we believe that earnings risk is minimal and forecast industrial REITs to deliver FY13F-15F DPU growth of c.3%.

Acquisition growth to moderate
On the inorganic growth front, competition for assets to remain with eight listed industrial REITs, while recent new policy measures by JTC to tighten selling restrictions for industrialists and REITs meaning that the pool of investable assets will shrink but transactions, if any, will be of stronger asset and tenant quality. Industrial REITs are likely to focus on development or asset enhancement activities to optimize returns.

An eye on growth. Across the industrial REITs, we expect MINT to deliver higher growths of 5% CAGR over FY13-15F (vs secto’s average of 3%) . Cache continues to offer visible and high yields of close to 8.2%-8.5%


Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 19/12/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock