SINGAPORE (Jan 26): OCBC is maintaining its “hold” call on Ascendas Real Estate Investment Trust (AREIT) with a higher fair value of $2.69.
This is despite consensus recommending a “buy” on the REIT.
See: Analysts keep Ascendas REIT at 'buy' despite a drop in 3Q DPU
The REIT on Thursday announced its 3Q17/18 results, which were in line with the research house’s expectations.
AREIT posted a 0.6% decline in its DPU for the quarter to 3.970 cents compared to 3.993 cents a year ago, despite a 1.0% increase in total amount available for distribution to $116.3 million.
This was due to an increase in the number of units in issue, higher management fees and the absence of a one-off property tax refund received last year.
See: Ascendas REIT's 3Q DPU dips 0.6% to 3.97 cents
Operationally, AREIT recorded positive rental reversions of 5.8% for its Singapore portfolio, but its Australia portfolio saw a slight negative rental reversion of 1.0%, which brought the overall portfolio rental reversion to 3.1%.
Portfolio occupancy came off slightly by 0.9 percentage points (ppt) q-o-q to 91.1%
In addition, the REIT has also announced the appointment of its new CEO, William Tay, which would take effect from Feb 1.
In a Friday report, analyst Andy Wong Teck Ching says, “Having worked at the sponsor, we expect the integration to be smooth.”
The REIT’s recent acquisitions include No.108 Wickham Street for A$106.2 million ($112.0 million) and 1-7 Wayne Goss Drive in Queensland for a land and development cost of A$30 million.
Meanwhile, AREIT is also divesting its No.84 Genting Lane property for $16.7 million.
See: Ascendas REIT divests Genting Lane property for $16.7 mil
“We factor these transactions in our model, and our FY18 and FY19 DPU forecasts are raised by 0.1% and 0.3%, respectively,” says Wong.
As at 3.02pm, units in AREIT are trading 5 cents higher at $2.80 or 17.5 times FY18 earnings with a DPU yield of 5.8%.
