Ascendas REIT

Ascendas REIT: OCBC maintains Hold with $2.28 TP. Note that REIT has been actively involved in capital recycling activities YTD in a bid to optimize its portfolio yield. Following the proposed sale of 6 Pioneer Walk in Jun, note that A-REIT had on 24 Aug announced the divestment of another property, Block 5006 Techplace II, for $38m. Based on estimates, the proceeds may likely relieve its interest burden going forward and may potentially add 0.01 S cents to its FY14F DPU. For the rest of FY13, believe A-REIT will deliver a stable set of performance, supported by full-year contributions from its past investments. However, house maintaining cautious view on its significant exposure (34% by valuation) to the business/science park segment, which has been seeing downward pressure on occupancy and rents. On a positive note, understand that the current market rents are 16-35% higher than the average passing rents for the areas due for renewal. As such, believe A-REIT will still put in a stable set of results.