MAYBANK Securities has upgraded its call on CapitaLand Ascendas Reit : A17U 0% (Clar) to “buy” from “hold”, despite lingering concerns over the real estate investment trust’s (Reit) business park supply, and the performance of its overseas assets.

The research house on Monday (Oct 30) said its upgrade was premised on Clar’s defensive characteristics, exposure to growth verticals such as the tech and logistics segments, as well as reasonable valuations following its recent unit price decline.

This comes after the Reit last week reported higher portfolio occupancy and continued positive rental reversions for the third quarter ended September – though Maybank noted that the steady operational data was accompanied by higher gearing and a lower interest coverage ratio.

After accounting for better-than-expected reversions, Maybank raised its distribution per unit (DPU) estimates for Clar by about 1 per cent.

Its price target, however, remains unchanged at S$2.65 upon applying a higher discount rate and rolling forward its valuation base to FY2024.

The research house’s analysts said that the Reit should also benefit from any pickup in the local high-end manufacturing or research and development spaces.

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Following Clar’s third-quarter business update, CGS-CIMB maintained its “add” call on the Reit with an unchanged price target of S$3.06, while DBS maintained its “buy” rating and reiterated its S$3.40 target.

CGS-CIMB analysts said they continued to like Clar for its diversified and resilient portfolio and healthy balance sheet.

In their view, progressive completion of its ongoing asset enhancement initiatives and redevelopment projects from Q4 FY2023 to Q1 FY2026 should drive further portfolio returns in the medium term.

Meanwhile, DBS expressed confidence in Clar’s ability to deliver a forward yield of about 6.1 per cent in FY2023.

Highlighting the Reit’s “resilient” operating performance and “healthy” gearing, DBS analysts said they believe Clar’s portfolio is well-positioned to weather any potential asset capital rate expansions in December 2023.

They project the Reit to report a DPU compound annual growth rate of about 2 per cent over the next three years.

Units of Clar were trading S$0.03 or 1.2 per cent higher at S$2.61 as at 10.18 am on Tuesday.