REITs

UOB-Kay Hian has called a buy on Frasers Centrepoint Trust (FCT), Ascendas Reit and K-Reit Asia. Apparently, the optimistic view on this sector has been related to lower inflation and lower refinancing risks, despite falling rents.

REITs or Real Estate Investment Trusts, have been one of my areas of focus recently. Having bought in several REITs such as CapitaComm(CCT), Suntec, Saizen and K-reit, I feel that the diversity in commercial, industrial and residential properties that these REITs cover should be a good long term equity investment.

Properties never go out of 'style', and generally stable given the nature of property holding and investment. The next 2 years should see gradual growth in this sector as the economy recovers and derived/end demand returns. The low interest rate should also see people putting their money in other asset classes other than in fixed deposits, and one of these might be in the property market.

Last month, CCT and Suntec Reit announced that they had secured loan facilities of $160 million and $825 million respectively, so refinancing should not be much of an issue in the short term.

Furthermore, our local REITs will be buffered from the inflation from US's take on quantitative easing (printing cash) due to the strong Singapore dollar. The coming week will be an interesting one to see how the prices of Ascendas and Frasers go. Afterall, target prices from UOB-KH are $1.93 and $1.44 respectively. Could consider if the STI takes a dip.