| UOB KAYHIAN |
CGS CIMB |
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Ascendas REIT (AREIT SP) Oct-Dec 19: Business Parks Make For Good Business
AREIT achieved positive rental reversion of 8.8% for leases renewed in Oct-Dec 19, driven by business & science parks in Singapore (+11.8%). The 28 newly-acquired business park properties in the US will make full-year contributions in 2020 and benefit from a high proportion of leases with rental escalation of 2.5-4.0% per year. Maintain BUY. Target price: S$3.35.
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REIT Coronavirus - SG bans Chinese arrivals
■ Industry RevPAR could fall into negative territory in 2020 following the ban on Chinese arrivals in Singapore and the deteriorating coronavirus situation. ■ REITs see immaterial impact so far. Any weakness could be offset by distributions from divestment gains. ■ Expect share price weakness. Hospitality is the least preferred subsector.
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| DBS VICKERS | MAYBANK KIM ENG |
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Far East Hospitality Trust Pure play status a double-edged sword
Downgrade to HOLD. We downgrade our recommendation on Far East Hospitality Trust (FEHT) to HOLD. Cautious sentiment shrouding hoteliers in Singapore as a result of the coronavirus outbreak is likely to affect FEHT’s DPU performance this year. In view of FEHT’s exposure to the Singapore market only and c.70% exposure to hotels by gross revenue (balance: c.12% serviced residences and c.18% commercial), we believe FEHT’s operations would be adversely impacted.
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AIMS APAC REIT (AAREIT SP) DPU Recovery Underway
NDR highlights: 3Q20, rental growth, acquisitions We hosted an NDR for AAREIT in Singapore. Key highlights include: (1) discussions on its 3Q20 operational performance; (2) rental recovery supported by easing logistics supply, and (3) acquisition growth profile. DPU recovery remains on track in our view, with upside from acquisition growth and redevelopment optionality from its under-utilised GFA. We have kept estimates unchanged, and see valuations as undemanding at 7+% DPU yield and 19% total return to our DDM-based SGD1.60 TP (COE: 7.8%, LTG: 1.5%).
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