Brokers' take

Ascendas Reit | Overweight Target price: S$2.85 Sept 26 close: S$2.68 JPMorgan, Sept 26

Ascendas Reit (A-Reit) has acquired its first CBD-fringe office in Brisbane's Fortitude Valley with the purchase of 100 Wickham Street for A$83.8 million (S$90.3 million). The property is fully occupied at a weighted average lease expiry of 4.8 years, which should shield it from potential leasing risks from subdued demand and high-teens vacancy rate currently present in Brisbane's CBD-fringe office market.

Initial acquisition yield of 7.6 per cent and purchase price of A$6,382 per square metre appear competitive and are in the middle of the 6.25-9.25 per cent and A$8,247-A$11,664 psm range for secondary CBD-fringe offices in the city. Most importantly, the acquisition will add 0.3 per cent to DPU, and a higher 0.8 per cent if it is fully funded by debt.