SINGAPORE (May 16): Religare is maintaining its “buy” call on EC World REIT with an unchanged target price of 92 cents given it has a solid portfolio that offers room to grow both organically and inorganically.

“With an FY17E/FY18E yield of 7.3%/7.8%, EC World also offers deep value to investors,” says analyst Pang Ti Wee in a Tuesday report.

EC World offers investors strong growth visibility with limited downside risk, given that only a small percentage of leases are due for renewal till FY20.

In addition, 71% of its GRI is anchored by master leases with built-in rental escalation and it has a low leverage ratio of 28.6%.

EC World’s 1Q17 gross revenue and DPU outperformed forecasts at IPO by 4.6% and 5.3% respectively and beat Religare’s estimates by 1% and 2% respectively.

Pang says, “The strong set of results was mainly due to additional rental income from the sheltered warehouse in Chongxian Port investment, lower property expenses and favourable RMB-SGD exchange rate movement.”

During the quarter, portfolio occupancy continued to improve, reaching 98.3%, versus 94.4% at listing. EC World also reduced its interest rate risk exposure in 1Q by hedging the remaining 50% of its offshore loan facility, bringing 100% of the offshore loan facility under a fixed rate.

As at 1Q17, the all-in interest rate for EC World’s loans was 5.4%.

Units of EC World are up 1 cent at 78 cents.