Ascendas REIT: Strategy for FY16 is to fill up the remaining space to move up portfolio occupancy to match the market level (~90%). Rental reversion growth for FY16 should narrow compared with FY15 & FY14. The sponsor, Ascendas Group, has about S$1bm worth of assets ready to inject into AREIT. Main criteria for an acquisition target are high remaining land lease (>50 years) and entry yield of 6%. Management is comfortable at current gearing of 33.5% (internal policy is not >40%). AREIT’s issuer rating by Moody’s of A3 Stable has helped lower debt financing costs.
The house maintains a BUY rating with TP$2.70.
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