Brokers' take

ESR Reit I BUY (initiate) Feb 12 close: S$0.515 Target price: S$0.61 RHB Research, Feb 12

ESR-REIT (real estate investment trust) has been on a transformational path from the time ESR Group (ESR) became its sponsor (January 2017), with a more than two-fold increase in asset value - it is currently the fourth-largest listed industrial Reit. We believe the market is yet to recognise the full potential of the economies of scale from its growth and sponsor strength as it trades at an attractive FY19F yield of 8 per cent. This is 170 basis points higher than that of its industrial peers and the S-REITs average.

Despite some threats from recent trade tensions, we expect overall industrial sector rents to improve 1-3 per cent and occupancy to slightly improve on the back of tapering industrial supply. This should have a positive impact on ESR-REIT, which has its assets strategically located across key industrial zones.