Downgrading to Neutral. Whilst remaining positive over the long-term
prospects of M-REITs, we downgrade the sector to Neutral as share prices
approach our targets. The sector now trades at 6.8% average gross yield
(5% for retail M-REITs), just 10bps below 2012 S-EIT’s 6.9% (before 10%
withholding tax for foreign institutional investors). The next
re-rating catalyst is likely to be the REIT-ing of KLCCP, which may set a
new benchmark in cap rates (capital valuation).
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Source: Maybank Research - 13 July 2012
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