Analyst Dale Lai from DBS maintained a Buy rating on Keppel REIT and keeping the price target at S$1.10.
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Dale Lai has given his Buy rating due to a combination of factors that highlight the strengths and potential of Keppel REIT. The REIT’s portfolio is anchored by high-quality office properties in Singapore’s prime central business district, which positions it well to benefit from a tight supply market expected to last until 2024. The valuation is attractive with a price-to-book ratio of 0.7x and a forward yield of approximately 6.7%, surpassing the sector average.
Dale Lai’s rating is also influenced by the stable outlook for Singapore’s office market, supported by solid property fundamentals and low vacancy rates. The REIT’s long weighted average lease expiry of about 4.7 years provides income visibility and stability, while its diversified tenant base mitigates concentration risks. Additionally, Keppel REIT’s active asset management strategy aims to optimize and grow its portfolio, driving inorganic growth. The decision to shift a portion of fees to cash is seen as a positive step to close the distribution per unit gap, further supporting the Buy recommendation.
According to TipRanks, Lai is a 3-star analyst with an average return of 4.4% and a 56.78% success rate. Lai covers the Real Estate sector, focusing on stocks such as Suntec Real Estate Investment, Keppel REIT, and CapitaLand Ascendas REIT.
In another report released on October 27, J.P. Morgan also upgraded the stock to a Buy with a S$1.18 price target.