DBS Equity Research has issued a 'Buy' rating on Singapore-listed Croesus Retail Trust, citing impending contribution from newly acquired properties, and the perception that unitholders' interest are now aligned with management given an internalisation exercise.
"Management internalisation improves alignment and removes takeover barrier", said DBS in a research report issued on 15 February.
"In addition, we believe that without an external trustee-manager, [Croesus Retail Trust] could remove a hurdle to potential takeover by a [Japanese REIT] as speculated by some market participants due to the trust's persistent high yield and discount to its NAV", the report added.
Croesus Retail Trust reported its results for 2Q 2017 on 14 February, with a 5.2% increase in DPS from the corresponding period in the previous financial year.
"Going forward, [Croesus Retail Trust] should benefit from the full-year contribution from the recent acquisitions of Torius (October 2015), Fuji Grand Natalie (April 2016) and Mallage Saga and Feeeal Asahikawa (May 2016)", said DBS.
The bank has maintained a target price of SGD0.99 on Croesus Retail Trust, citing 2Q 2017 results that largely came within its expectations.
Units of Croesus Retail Trust last changed hands on the Singapore Exchange at SGD0.875.