Brokers' take

ESR-Reit | BUY (maintained) Jan 21 close: S$0.53 Target price: S$0.59 DBS Group Research, Jan 21

We believe that the worst could be over for ESR-Reit. We see synergies that the manager can extract post-consolidation, which will be the focus in 2019. We see low-hanging fruit coming from cost synergies from an enlarged platform that can be tapped, and stronger access to capital markets backed by a strong sponsor in ESR.

Our estimates are lower than consensus on the back of more conservative reversion assumptions. Despite the current market uncertainty, we find comfort in ESR-Reit's ability to deliver higher earnings organically on the back of expected positive rental reversions in 2019. We understand that passing rents across its portfolio (except the light industrial space) are generally at or below market levels, ensuring that earnings downside risk is minimised.