S-REITs' yield compression likely to slow: Deutsche Bank

S-REITs’ 3Q12 operating trends were generally steady with some initial signs of weakness, such as with CDL Hospitality Trusts, with DPUs up an average 5% on-year, Deutsche Bank says.

“The acquisition landscape is increasingly challenging, suggesting less upside for REITs without a visible pipeline and slower inorganic growth drivers into FY13. While we like the REITs’ stable cashflows and proactive capital management, we expect yield compression to slow after the recent strength with capital raising a near-term risk.”

It favours S-REITs with upside potential from acquisitions and better medium-term growth potential, with its preferred picks Ascendas REIT, Mapletree Commercial Trust, CapitaCommercial Trust and Mapletree Logistics Trust.

But Deutsche Bank keeps its preference for developers.