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Keppel REIT has been recommended to buy with price target of S$1.36
UOB Kay Hian upgraded Keppel REIT, previously known as K-REIT Asia, to 'buy' and raised its target price to S$1.36 from S$1.26, on expectations of improving office rentals.
Units of Keppel REIT, which owns office buildings, were up 2.5 percent at S$1.22. They have jumped 47.3 percent since the start of the year, compared with the FTSE ST Real Estate Industrial Trust's 34 percent gain.
Keppel REIT said its third-quarter distribution per unit was 1.96 Singapore cents, in line with UOB's expectations and up 84.5 percent from a year earlier, helped by higher rents and property income.
"We anticipate office rentals to bottom out in the next 2-3 quarters, with K-REIT expected to remain resilient due to its near-full occupancy long weighted leases and its highest exposure to Grade-A office assets in Singapore," UOB said in a report.
The rate of decline for office rentals in Singapore is slowing, and UOB expects Keppel REIT to start seeing positive rental reversions, while acquisitions in Australia will also contribute to further growth.
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