Stock Upgraded: A_REIT target price raised to 2.5 by CIMB-GK

CIMB-GK says it has raised its target price for Ascendas Real Estate Investment Trust (A-REIT) to 2.50 sgd from 2.43 sgd to reflect higher yields from the trust's new deal to develop a partial build-to-suit distribution facility at Changi LogisPark here. Ascendas REIT has said the cost of development is 32.5 mln sgd and that the site will be developed into a two-storey distribution center and office facility scheduled for completion in early 2008. CIMB-GK said in a note: "Assuming stabilized occupancy of 87 pct and [a] gearing level of 40 pct, we estimate the investment yield of this development property to be as high as 8 pct, in line with the high-yielding nature of such projects." The brokerage has therefore increased its forecast of distribution per unit for A-REIT by 2.2 pct to 0.139 sgd for the financial year ending March 2009. It is keeping its "outperform" rating for A-REIT. At 9.57 am, A-REIT was up 0.03 sgd or 1.29 pct at 2.36, on volume of 826,000 shares.