SINGAPORE (July 1): OCBC has upgraded its market outlook for SREITs to “overweight” while reiterating its “buy” calls for Frasers Centrepoint Trust (FCT), Keppel DC REIT (KDCREIT) and Ascendas REIT (AREIT).

The research house favours their defensive attributes, strong management team and healthy financial position and has indicated fair values of $2.25, $1.24 and $2.56 respectively.

“Following the Brexit outcome announcement, the share prices of Frasers Centrepoint Trust, KDCREIT and Ascendas REIT have increased 4.0%, 2.8% and 6.0%, respectively, versus the STI’s flat performance and FTSE ST REIT Index’s 3.6% gain,” OCBC analyst Andy Wong notes.

Fed Chairperson Janet Yellen’s recent testimony to Congress where she warned that a “Leave” outcome in the UK referendum could have significant economic repercussions, coupled with the movement in the federal funds futures rate, has also led the research house to believe that the probability of at least one rate hike by Dec this year has fallen drastically.

“Given the continued vagaries in the macroeconomic and geopolitical landscape, we see a structural shift towards a prolonged period of accommodative interest rates and believe that defensive yield plays are likely to enjoy significant tailwinds ahead,” says Wong. However, he also cautions that headwinds may pose operational challenges in the near-term.

As at 12.40pm, FCT was down 0.9% at $2.11, KDCREIT was up 0.9% at $1.12 while AREIT was down 0.4% at $2.47.