Goldman Sachs picks Asia REITs as winners on easing lockdowns

1, 3 & 5 Changi Business Park Crescent. (PHOTO: Ascendas Reit)

By Nick Chang and Ishika Mookerjee

(Bloomberg) -- Goldman Sachs expects Asia Pacific’s real estate investment trusts to outperform the broader market on their dividend prospects as economies reopen.

The “relative stability” and higher visibility of dividends in the REIT sector has helped the stocks outperform the overall market during periods of rate cuts and slow economic growth, analysts including Justin Kwok and Yi Wang wrote in a report on Monday. There will also be higher certainty in rental income with the gradual reopening of business activities in the region, they added.

Commercial property companies have taken a hit from the coronavirus pandemic, which saw lockdowns imposed around the world, triggering structural changes where people work. The S&P Asia Pacific REIT Index, which currently offers a dividend yield of about 5%, is down 19% year to date -- triple the losses in the broader gauge for regional stocks.

Read: A $100 Billion REIT Rout Pulverizes Family Fortunes in Asia

Here are some of their recommendations:

• Buy Ascendas REIT, Charter Hall Social Infra REIT, LinkREIT, Scentre Group, and Nippon Prologis

• Sell Nippon Building Fund, Japan Real Estate, Mapletree Commercial Trust, Mapletree Industrial Trust, Charter Hall Group,Champion REIT, and Daiwa Office REIT

• According to Goldman Sachs scoring, Singapore and Australia REITs are ranked highest in the region in terms of post-virus recovery, and industrial trusts may hold up better even if shutdowns are extended; Hong Kong scores the lowest

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