Thursday, September 30, 2010


K-Reit: Macquarie upgrades to Outperform from Neutral, lifts target price to $1.38 from $1.05 after raising FY12-15 DPU estimates by 7-16% to reflect higher rental assumptions from 2012. Favours K-REIT for its exposure to the improving office outlook. Notes 85% of its portfolio comprises Spore office assets. Adds pace of office rent recovery stronger than expected, with prime Grade A rents reaching $9psf/month as at 3Q10 after bottoming in 1Q10 at $8psf/month amid active pre-leasing activity.

Tips Marina Bay Financial Centre, 33%-owned by parent Keppel Land as potential acqn target. Possible share placement in store but unlikely to be at significant discount to NAV of $1.45. However, current DPU yield of 4.7% does appear to be on the low end.

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