OCBC keeps Ascott Residence Trust (A68U.SG) at Buy, raises target to $1.38 from $1.33, says Dow Jones.

Says with acquisition of 28 properties from sponsor, will transform from Pan-Asian to international REIT, doubling total asset size to almost $2.85 billion, moving from 12th to 6th largest S-REIT in terms of total asset value. 

 

Notes, enlarged portfolio now constitutes 55% Pan-Asian, 45% European assets. “This, coupled with the enlarged free-float post-EFR (equity fund raising), ART has not only improved its diversification geographically but also makes its shares more palatable to a wider pool of international investors.” 

 

Adds, most of the European buys on master-leases, offer less cash flow volatility to REIT, helping improve management’s debt capacity. House also likes ART’s stance toward divestment of assets that have reached optimal stage of lifecycle, use of proceeds toward funding further acquisitions or debt repayment; but has some lingering concerns over existing FX management given “forthcoming influx of European currencies into the portfolio.”

 

Shares flat at $1.16.