SINGAPORE (Dec 15): DBS Vickers has kept its “buy” call on Ascendas Reit (A-REIT) with a reduced target price of $2.52, from $2.57, to take into account a recent placement of new shares to fund new acquisitions.

In a Dec 14 note, DBS Vickers notes that the REIT’s occupancy rate has bottomed in Q3 this year, up marginally from 88.6% in the preceding quarter to 88.9%. “Looking ahead, with vacancy rates standing at c.11%, we believe that A-REIT has upside to earnings if the unoccupied space can be filled, which is not included in our earnings forecast,” the brokerage states.

The REIT has been able to raise its rental, even with growing challenges in the market. For example, in its Q2FY16 earnings, A-REIT recorded 9.1% reversion, led by higher rents of its business and science parks.

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