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ESR-REIT downgraded to 'hold' on potential rental default from Hyflux Membrane

Samantha Chiew
Samantha Chiew4/10/2019 04:55 PM GMT+08  • 2 min read
ESR-REIT downgraded to 'hold' on potential rental default from Hyflux Membrane
SINGAPORE (Apr 10): ESR-REIT has been downgraded to “hold” from “buy” previously by OCBC Investment Research with a decreased fair value of 55 cents from 57.5 cents, on the back of lower returns and concerns regarding Hyflux Membrane.
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SINGAPORE (Apr 10): ESR-REIT has been downgraded to “hold” from “buy” previously by OCBC Investment Research with a decreased fair value of 55 cents from 57.5 cents, on the back of lower returns and concerns regarding Hyflux Membrane.

The research house initiated its coverage on ESR-REIT on Dec 14, 2018 and the stock has since posted total returns of 9.76%, compared to the Straits Times Index’s 7.41%. It still continues to trade at a discount to industrial REITs that also have large portfolios, but this has narrowed significantly since the research house’s initiation.

ESR-REIT also has a relatively high net gearing ratio of 41.9%, which increases its risk of a dilutive equity financing.

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