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First REIT: Ending FY16 on a stable footing First REIT (FREIT) reported a stable set of 4Q16 results which met our expectations. Gross revenue and DPU rose 5.1% and 1.9% YoY to S$27.0m and 2.13 S cents, respectively. However, it recorded a net fair value loss of S$8.9m for its investment properties in FY16. Looking ahead, Singapore’s CPI growth is expected to be positive in 2017 and 2018, which would be a welcome reprieve for FREIT’s base rental revision for its Indonesian properties. After making some tweaks to our forecasts and raising our cost of equity assumption from 7.4% to 7.7%, we derive a lower fair value estimate of S$1.32 (previously S$1.36). While we like FREIT for its healthy balance sheet (gearing of 30.8% as at end-FY16) and exposure to Indonesia’s robust healthcare sector, we maintain our HOLD rating on the stock as we see limited upside potential at current price level. |
CapitaLand Commercial Trust 4Q lifted by CapitaGreen ■ 4Q16 DPU was slightly above our estimate and FY16 DPU beat our forecast by 2%. ■ The results were boosted by the strong showing from CapitaGreen and improved performance from Raffles City. ■ We expect FY17-18 outlook to remain fairly steady with fewer lease expiries and potential stabilisation of office rents with new supply tapering off. ■ Details on Golden Shoe Carpark (GSCP) redevelopment are still pending. ■ We maintain our Hold call with a slightly lower target price of S$1.50.
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Cambridge Industrial Trust (CREIT SP) : HOLD e-Shang Redwood to acquire 80% indirect interest in the Manager e-Shang Redwood (ESR)’s subsidiary will acquire an 80% indirect interest in the Trust Manager of CIT ESR is the second largest developer in North Asia focusing on warehouses, with 6.5m sqm of projects We are positive for CIT to have a strong Sponsor who should benefit from the growing e-commerce sector Pending a detailed strategic plan, we maintain our HOLD call
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