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ASCENDAS India Trust (a-iTrust) had their rating upgraded from "hold" to "buy" by DBS Equity Research, as analysts believe that the acquisition of a portfolio of warehouses is a "transformative transaction" that heralds a new leg of growth beyond its exposure to the already fast-growing business space sector.
The acquisition, combined with other announced redevelopments, should result in a-iTrust delivering a three-year distribution per unit compound annual growth rate (CAGR) of 9 per cent, three to four times the average Singapore Reit, said DBS analysts.
The report said: "Our confidence in a-iTrust's ability to execute on its warehouse expansion plans is due to its sponsor Ascendas-Singbridge's strong track record in the Asian warehouse industry."
In addition, through its untapped land-bank and sponsor pipeline, a-iTrust has access to over five million square feet of floor area.
"Combined with the recent expansion into the Indian warehouse space which provides for a potential acquisition pipeline of 2.8 million square feet, a-iTrust has a visible source of growth over the long term. The ability to execute on these growth opportunities is also supported by its strong balance sheet," added DBS analysts.
DBS upgraded their call on a-iTrust from "hold" to "buy", with a revised target price of S$1.25.