RHB Research is keeping Manulife US REIT (MUST) at “purchase” with an imperceptibly higher target cost of US$1.00, from 99 US pennies already in Singapore Stock Market.
“MUST is a favored pick in abroad mid-top REITs for its high return, natural lease development, and introduction to a bouncing back US office advertise,” says RHB investigator Vijay Natarajan in a Thursday report.
As indicated by Natarajan, Manulife US REIT offers an alluring FY18F yield of 7.1%. This is more than 100 premise focuses over the normal among Singapore office REITs, he says.
Furthermore, Natarajan takes note of that there is space for positive lease development ahead as normal leases over MUST’s office properties are as of now 5-15% beneath the Singapore Stock market.
Other key drivers for natural development incorporate inbuilt lease accelerations of near 2.5% for each annum, inhabitance upgrades, and resource improvement activities (AEI) commitments, he includes.
In the mean time, solid support by support Manulife, which has repeated its full sense of duty regarding developing the REIT, could see MUST convey inorganic development by means of acquisitions.
“In spite of yield pressure and solid liquidity in the market, MUST sees a decent potential to develop by means of acquisitions,” says Natarajan. “Moreover, its patrons’ solid image name and budgetary position should help MUST in finalizing outsider negotiations.“
RHB’s sure position on MUST comes after the REIT posted a solid arrangement of results in 2Q17.
The main immaculate play US office REIT recorded in Asia, it announced dispersion per unit (DPU) of 1.58 US pennies for the quarter, about 7.5% higher than the IPO plan projection of 1.47 US pennies.
Net property salary in 2Q17 came in 3.7% above projection at US$12.8 million ($17.4 million).
“We change our FY18-19F DPU by 1-2% figuring in lower than anticipated financing costs and higher lease development,” says Natarajan.
As at 12.12pm, units of Manulife US REIT are exchanging 2 US pennies higher at 94.5 US pennies.