SINGAPORE (Oct 27): Cambridge Industrial Trust’s (CREIT) portfolio repositioning for the current downturn is leading DBS to maintain its “hold” call with a target price of 54 cents.

“The strategic review may open up a myriad of scenarios (M&A, trade sale or even an internalisation of manager),” says analyst Derek Tan in a Wednesday report.

Tan notes that CREIT’s portfolio occupancy is high at the expense of declining rents, which is “a painful but justified strategy for the REIT”.

The REIT is also experiencing a couple of speed bumps. Its Australian partner is terminating a joint venture, putting a pausing efforts to grow its business on the continent, while more conversions to multi-tenanted properties are expected, exposing DPU to downside risks. This has led to a 8% cut in margins estimates, notes Song.

CREIT has been active in acquisitions and focuses on optimising portfolio performance through asset enhancement initiatives and divestments to redeploy capital. CREIT is still committed to its long-term acquisition strategy in Australia and is exploring other opportunities, notes Song.

A re-rating would be contingent on the outcome of the strategic review CREIT is undertaking, highlights Tan.

“Any incremental steps taken by the manager to drive value should be well received by investors,” the analyst adds.

Units in CREIT are up 1 cent at 56 cents.