SINGAPORE (May 15): While DBS analysts Dale Lai and Derek Tan expect demand and rental rates for industrial real estate to moderate and possibly turn slightly negative in 2020, they have maintained their “buy” call on AIMS APAC REIT (AAREIT) due to strong organic growth. 

“Organic growth from the commencement of rental payments from the recently redeveloped 3 Tuas Ave 2 would help mitigate weakness in the overall portfolio. Having also embarked on the conversion of master lease assets into multi-tenancies early, improvement in rental contributions from the three converted assets should support earnings in the near term,” they noted in a broker’s report on 14 May 2020. 

DBS's Lai and Tan have reduced the REIT's target price to $1.40 from $1.50 with a 19% upside. It assumes a terminal growth rate of 1.5%, with occupancy and rental rates for 2020 moderated to account for Covid-19. 

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