SINGAPORE (Oct 23): OCBC is maintaining its “buy” call on OCBC with a fair value of $2.58 as 2Q DPU grew 13.7% with higher occupancy rate.

In a Friday report by Andy Wong Teck Ching, A-REIT achieved positive rental reversions of 9.1% for its Singapore multi-tenanted properties portfolio in 2Q.

A-REIT also reported a sturdy set of 2QFY16 results which came in within OCBC’s expectations.

Gross revenue grew 10.8% to $182.6 million due to contributions from completed AEIs and acquisitions, coupled with positive rental uplifts on renewals and higher occupancy at certain properties.

DPU jumped 13.7% to 4.16 cents, but this was partly boosted by a one-off $6.5 million distribution of taxable income from operations arising from a rollover adjustment related to a ruling by IRAS on the non-deductibility of certain upfront fees incurred in FY09/10.

“Even if we exclude this, A-REIT’s adjusted DPU of 3.889 S cents still translated into a growth of 6.3% YoY,” says Wong.

In terms of financial position, A-REIT’s aggregate leverage ratio stood at 34.6%, as at Sept 30, 2015.

This is expected to be increased to 37.8% once A-REIT completes the acquisition of its Australian logistics portfolio.

Currently, 72.1% of its borrowings have been hedged for a weighted average term of 3.4 years.

“We maintain our forecasts, BUY rating and S$2.58 fair value estimate on A-REIT. The stock is currently trading at FY16F P/B ratio of 1.11x and distribution yield of 6.3%,” concludes Wong.

As at 11.58am, Sembcorp Marine is down 4.3% at $2.43.