Ascendas REIT fair value cut to 1.88 sgd by OCBC

OCBC Securities said it has cut its fair value for Ascendas Real Estate Investment Trust (Ascendas REIT) to 1.88 sgd per share from 2.18 as it doubts whether the industrial landlord can sustain the pace of its acquisitions Overnight, Ascendas REIT reported that distribution income rose 20 pct year-on-year to 40 mln sgd in the first quarter to June but distribution per unit (DPU) grew at a much slower rate of 9.0 pct to 0.0309 sgd. "As in previous years, growth was due to acquisitions but was moderated at the DPU level by higher operating and interest rate expenses and dilution from the issue of units. The key issue with Asecndas REIT is its ability to maintain its pace of acquisition," OCBC said in a note to clients. "Its assets acquisition has been running at an unsustainable annual compounded rate of over 65 pct. More importantly, with competition heating up, this could frustrate Ascendas REIT's plan to achieve target asset size of 5.0 bln sgd. We have thus revised down our asset target size from 5.0 bln sgd to 4.0 bln sgd," OCBC said. "At its present trading range, we do not see Ascendas REIT's valuation as attractive, and we thus maintain our 'hold' rating," it added. At 10.39 am, Ascendas REIT was down 0.01 sgd or 0.52 pct at 1.92 with 277, 000 shares traded.