Sunday, September 22, 2019

Suntec REIT - Upgraded Stock

Amid the expectations of further cuts in interest rates, real estate investment trusts (Reits) should continue to perform well. Within the Reits sector, Suntec REIT is the top pick.

The analyst sees better earnings clarity from the flow through of positive rental reversions, completion of three development assets (9 Penang Road, Olderfleet and 21HS) by 1H20 as well as higher income contribution from two Australian asset acquisitions. Meanwhile, the recent placement that raised gross proceeds of $158.9 million (of which 79.5 percent of the gross proceeds are used to finance the Australian acquisitions) also removed an overhang of any imminent fund raising.

At the current share price of $1.94, Suntec REIT is trading at a price-to-book (P/B) value of 0.91 and a forward-FY19 distribution yield of 5.2 percent.

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