ESR-REIT also has a relatively high net gearing ratio of 41.9%, which increases its risk of a dilutive equity financing.
SINGAPORE (Apr 10): ESR-REIT has been downgraded to “hold” from “buy” previously by OCBC Investment Research with a decreased fair value of 55 cents from 57.5 cents, on the back of lower returns and concerns regarding Hyflux Membrane.
The research house initiated its coverage on ESR-REIT on Dec 14, 2018 and the stock has since posted total returns of 9.76%, compared to the Straits Times Index’s 7.41%. It still continues to trade at a discount to industrial REITs that also have large portfolios, but this has narrowed significantly since the research house’s initiation.
