Suntec REIT (T82U.SG) is up 0.7% at $1.51, extending its 5.6% gain since the start of December after bottoming out at a 3-month low of $1.42 late last month.

The pre-rebound pullback came partly on dilution concerns given Suntec’s $428.8 million placement of new units to partly fund the purchase of a one-third stake in Singapore’s Marina Bay Financial Centre and an accompanying mall. 

With the acquisition now completed and the price retracing most of its 9.0% November decline, Suntec appears likely in the near term to revisit its $1.56 52-week high in October, based on the current chart action, backed by a bullish operating outlook. 

 

“A faster-than-expected pick-up in (industry-wide) rents and capital values has been supported by a squeeze in reported vacancy,” says Nomura, which has a Buy call and a $1.72 target; “stronger demand, coupled with anticipated stock demolitions, will see lower-than-expected peak vacancy, underpinning the current momentum in rental growth.”