Reuters: Hot Stocks: STOCKS NEWS SINGAPORE-CIMB downgrades K-REIT to 'neutral'

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STOCKS NEWS SINGAPORE-CIMB downgrades K-REIT to 'neutral' Sep 27th 2012, 01:36 Wed Sep 26, 2012 9:36pm EDT CIMB Research downgraded K-REIT Asia, which owns commercial assets, to 'neutral' from 'outperform', citing limited further upside, but raised its target price to S$1.23 from S$1.21 to reflect the debt-equity funded acquisition of a Perth office development. Units in K-REIT were flat at S$1.19, and have surged 43.6 percent since the start of the year, compared to the FTSE ST Real Estate Industrial Trust Index's 29.6 percent gains. K-REIT agreed to buy a 50 percent stake in a new office tower development in Perth, Australia, for A$165 million, which could be accretive but mainly because of funding using cheap Singapore dollar debt, said CIMB. The brokerage also said it likes the visibility of the long lease with a 3-5 percent annual rental step-up, but the long lease could result in limited upside for K-REIT in a buoyant Perth office market. However, CIMB downgraded K-REIT due to limited upside in its share price and as equity fundraising needs are likely to limit any value added from a potential acquisition of Marina Bay Financial Centre office tower in Singapore. 0930 (0130 GMT) (Reporting by Charmian Kok in Singapore; charmian.kok@thomsonreuters.com) Link this Share this Digg this Email Reprints

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