K-REIT (technical)

K-REIT: UOB Kay Hian note that Keppel REIT’s 1Q13 results were in line as it continued to deliver higher occupancies. Keppel REIT holds the best Grade-A office portfolio in Singapore. Expect Grade-A office rentals to rise 8% in 2014 after bottoming out this year, and for office demand to rebound while demolitions could cut 50% of upcoming supply. MBFC Tower 3’s occupancy is close to 80% and it will be fully leased by end-13. The sale of Keppel Land’s 33% stake in the development would be a key catalyst to watch in the yr ahead. Keppel REIT boasts of a long weighted average lease expiry of 5.7 yrs. This lends resilience to its portfolio. House raise TP to $1.64 on improving office segment fundamentals adjusted for the risk of dilutive equity fund-raising. Technically, the stock has broken above $1.37 which could now be a potential support level should prices retrace from $1.51. On the longer horizon, watch to see if the stock could test $1.64.