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Three trends seen in REITs' Q2 earnings reports


One is the apparent bottoming out in the office sector.

Analysts at OCBC Investment Research said REITs under their coverage reported results within expectations, with distribution per unit growth clocking in a flat growth for the past quarter.

During the said quarter, the analysts observed three key trends in the REITs' results.

For one, the office and retail space saw some cap rate compressions by about 10-40 basis points and 40-50 basis points, respectively, based on the valuation exercise conducted by independent valuers.

"This was driven by a number of robust transactions in the market carried out at firm cap rates," lead analyst Wong Teck Ching Andy said.

Meanwhile, the analysts saw that operating metrics have shown some positive signs across various sub-sectors.

"For example, office rents appear to be bottoming out," Wong explained.

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