DBS analyst Dale Lai maintained a Buy rating on ESR-REIT (CGIUF – Research Report) yesterday and set a price target of S$0.34.
Dale Lai has given his Buy rating due to a combination of factors surrounding ESR-REIT’s growth and strategic positioning. ESR-REIT boasts a substantial portfolio with over 80 industrial properties and participation in three property funds across Singapore and Australia, with a total asset value around S$5.5bn. The company’s significant presence in Singapore, coupled with its expansion in Australia, provides a balanced and diversified portfolio which contributes to its strong market position. Additionally, ESR-REIT’s high yield of over 7%, which stands approximately 200 basis points above its large-cap industrial S-REIT peers, renders it an attractive investment opportunity.
Furthermore, Dale Lai’s confidence in ESR-REIT is bolstered by its post-merger asset recalibration strategy. The REIT’s proactive management in divesting non-core assets and reinvesting in higher yielding opportunities is expected to enhance value and potentially lead to a re-rating of the stock. The ongoing portfolio rejuvenation, including redevelopment projects and asset enhancement initiatives, is anticipated to drive organic growth. Leveraging its sponsor’s substantial pipeline of assets worth around US$2.0bn, ESR-REIT is also well-positioned to make accretive acquisitions, such as the recent purchase of a modern logistics facility in Japan, which is projected to generate significant yield.
Lai covers the Real Estate sector, focusing on stocks such as Keppel DC REIT, ESR-REIT, and CapitaLand Ascendas REIT. According to TipRanks, Lai has an average return of -11.1% and a 18.87% success rate on recommended stocks.
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ESR-REIT (CGIUF) Company Description:
ESR-REIT is a Singapore-based industrial real estate investment trust that invests directly or indirectly in income-producing real estate and real estate-related assets, which are used primarily for industrial, warehousing and logistics purposes. The Trust operates through the leasing of investment properties segment. Its properties range from logistics, warehousing, light industrial, general industrial to car showroom and workshop.
