SINGAPORE (Feb 5): Singapore-focused office real estate investment trusts are being increasingly seen as a proxy for rising GDP growth. Their distribution per unit (DPU) yields are below 5%, yet their unit prices continued to rise last year. Perhaps they have risen too much — the largest office REITs did retreat somewhat in January. But, if the rental outlook remains positive, their asset valuations may rise further, propelling their net asset values higher.

For FY2017, CapitaLand Commercial Trust (CCT) was the outperformer among the REITs in general, giving a total return of 37%, according to its manager. Most of the gain was from the 30.7% rise in the unit price, with the rest from DPU yield based on the weighted average price as at Dec 31, 2016 and the rights issue price. Keppel REIT did well too. It gave its unitholders a price return of 23.5% last year, with a further 5.7% from its DPU yield.

However, both REITs reported declines in DPU for FY2017. For instance, CCT’s FY2017 DPU fell 13% to 8.66 cents, from 9.08 cents in FY2016. Keppel REIT’s DPU for the same FY fell to 5.7 cents, down 10.5% y-o-y.

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