Percy Leung, an analyst from DBS, maintained the Buy rating on SF Real Estate Investment Trust. The associated price target remains the same with HK$3.02.
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Percy Leung has given his Buy rating due to a combination of factors, notably SF REIT’s unique positioning as the only Hong Kong-listed logistics REIT with a portfolio of modern warehouses in Hong Kong and China backed by S.F. Holding as the anchor tenant and guarantor. Although the renewed leases with SFH Group entail sizeable rent cuts and a modest downsizing at the Tsing Yi asset, the impact on distributions is manageable, with only a mid‑single to low‑teens percentage decline in DPU projected over FY26–27.
At the same time, the units are expected to deliver an appealing forward distribution yield of about 7.9–9.0% for FY26–27, which is higher than many comparable Hong Kong REITs and should underpin the unit price even amid rental weakness. Leung’s target price of HKD3.02, derived from a Dividend Discount Model using a 7.7% discount rate, implies upside from the last traded price of HKD2.74, justifying the Buy call despite cyclical risks such as potential further softening in logistics demand across Hong Kong and China.