In a report released yesterday, Jonathan Koh from UOB Kay Hian maintained a Buy rating on CapitaLand Ascendas REIT (ACDSF – Research Report), with a price target of S$3.58.
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Jonathan Koh has given his Buy rating due to a combination of factors, including the strategic acquisition of 9 Tai Seng Drive (9TSD) and 5 Science Park Drive (5SPD). These acquisitions are expected to enhance CapitaLand Ascendas REIT’s (CLAR) portfolio by expanding its data centre footprint in Singapore, a market characterized by limited supply and low vacancy rates. The 9TSD acquisition offers an attractive net property income (NPI) yield of 7.1% post-transaction costs, with potential for rental increases due to its current under-rented status compared to market rates.
Additionally, the acquisitions are projected to be accretive to the distribution per unit (DPU), enhancing shareholder value. The 5SPD property, fully occupied by a reputable tenant, is acquired at a discount to its independent valuation, further contributing to the REIT’s growth. These strategic moves are expected to increase the assets under management in Singapore and improve the overall portfolio’s valuation, supporting the Buy rating with a target price of S$3.58.
ACDSF’s price has also changed slightly for the past six months – from $1.865 to $1.945, which is a 4.29% increase.