DBS downgrades recommendation on ESR-REIT to ‘Hold’

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DBS Investment Research has downgraded its call on ESR-REIT to ‘Hold’ as the unit price of the REIT has reached the bank’s target price.

The REIT, which was previously known as Cambridge Industrial Trust before a rebranding exercise in June 2017, is currently repositioning its portfolio amid a downturn in the Singapore industrial space market.

ESR-REIT may be seeing stable occupancy rate, but this has come at the expense of positive rental reversions, said DBS in an investment report released on 14 July.

The banks also foresees “road bumps” ahead as the REIT deals with single to multi-tenant lease conversions, which could lead to more downside to DPUs.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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