S-REITS hurt by collapsing Euro

Find out S-REITS tagged as 'worst' performers in terms of future returns and are unlikely to ride through turbulence.

MayBank KimEng analysed the total returns (capital return + distributions) since listing of the 10 largest S-REITs with a trading history of at least five years.

As expected, REITs in the more resilient subsectors such as industrial and retail – having endured SARs, the subprime crisis and GFC – topped its list with the best performers being CDL Hospitality Trusts (CDLHT), Ascendas Real Estate Investment Trust (A-REIT) and Frasers Centrepoint Trust (FCT).

CDLHT stands out, its share price having soared by about 151% since 2008 on the heels of a tourism boom.

The worst performer, MayBank said was K-REIT Asia, dragged down by a 17-for-20 rights issue for the OFC acquisition in 2011 and a 1-for-1 rights issue in 2009 and an 8-for-5 rights issue in 2008 for acquiring one-third ORQ interest and Prudential Tower Strata.

Barring a full-blown European debt crisis, MayBank said that think it is unlikely that S-REITs will decline to 'irrationally' low levels as in the days of the GFC.  "This is partly because S-REITs have stronger balance sheets this time around. Moreover, interest rates are still relatively low and a tightening of credit (credit crunch) among financial institutions, which prevailed in 2008-09, has yet to occur," the report read.