The joint acquisition by GIC and ESR Cayman of Blackstone Group’s industrial and logistics assets in Australia will benefit industrial Singapore REITs (S-REITs), says DBS Group Research analyst Derek Tan.

GIC and ESR Cayman are acquiring a portfolio of 45 assets for A$3.8 billion ($3.92 billion) or 10% above valuation, which Tan says sets a landmark pricing for the industry. The price implies a yield of around 4%.

Pursuant to the transaction, Tan believes year-end valuation exercises should see increased values for similar Australian assets. This, he says, should benefit select industrial S-REITs, particularly those which have logistics-focused exposure in Australia.

"We believe that the likes of Mapletree Logistics Trust (MLT), Frasers Logistics & Commercial Trust (FLCT), and ARA LOGOS Logistics Trust (ALOG) will be most leveraged to benefit from this transaction," he adds.

DBS has a 'buy' call for MLT, FLCT, and ALOG with target prices of $2.20, $1.85 and 80 cents respectively.


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Tan notes that FLCT’s valuation continues to be attractive relative to peers as it trades at a P/NAV of 1.4 times with an implied cap rate of 4.8%, which he believes looks set for a compression, given 46% of its assets are similar types of properties.

In addition, he notes for ESR-REIT (rated ‘buy’ with a target price of 45 cents), the availability of the asset pipeline will be attractive as it pivots away from its pure Singapore industrial exposure.

As at 2.52pm, shares in MLT, FLCT, ALOG and ESR-REIT are trading at $1.95, $1.47, 73.5 cents, and 40.5 cents respectively.