SINGAPORE-LISTED office real estate investment trusts (S-Reits) have surged in the past week, after US President Donald Trump signed an executive order mandating federal employees to return to in-person work.
As at last Friday’s (Jan 24) close, the trio of US office Reits recorded a strong weekly gain of more than 10 per cent. Keppel Pacific Oak US Reit surged 16.3 per cent to US$0.25 a unit; Manulife US Reit gained 12.6 per cent to US$0.098 a unit; and Prime US Reit advanced 10.7 per cent to US$0.186 a unit.
The executive order issued by Trump on Jan 20 required the heads of all executive branch departments and agencies to promptly end remote work, with employees returning to full-time, in-person work, with necessary exemptions allowed by department and agency heads.
UOB Kay Hian (UOBKH) is positive on Singapore-listed US office Reits, on the back of corporate giants’ return-to-office mandate. It also sees the US federal government’s push for return to office work as an impetus for the private sector to follow suit.
The brokerage noted that corporate giants such as Amazon, JPMorgan, Boeing and Tesla are demanding that employees work five days a week at the office. More companies are also enforcing minimum office attendance hours. These factors are boosting the need for more office space to accommodate returning workers.
UOBKH reiterated its “overweight” call and said that “overwhelmingly attractive valuations beckon” for SGX-listed US office Reits.
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RHB also has an “overweight” call on overseas-focused Reits. It said in a recent note that a key highlight of the second and third-quarter results posted by the Singapore-listed US office Reits was the successful refinancing of maturing or upcoming debt.
This has “raised investor confidence of a sector revival and potential bottoming of the US office market”, it added.
While the research house expects volatility in the share prices of Singapore-listed US office Reits in the near term, it remains positive on these Reits’ long-term recovery, on the back of improving leasing momentum and refinancing secured.
As at 9.50 am on Monday, Keppel Pacific Oak US Reit was up 2 per cent or US$0.005 at US$0.255. Manulife US Reit was down 1 per cent or US$0.001 at US$0.097, and Prime US Reit fell 0.5 per cent or US$0.001 to US$0.185.
