Lender DBS Group Holdings' Ltd acquisition of a 30
percent stake in a Singapore office tower for S$1 billion shows
that capital values and fundamentals of prime grade A office
space will continue to hold up, said Credit Suisse.
However, the acquisition also means that Suntec Real Estate
Investment Trust is unlikely to acquire a stake in the
office tower, Marina Bay Financial Centre Tower 3, which was
initially expected by the market. This means a limited
acquisition pipeline for Suntec REIT.
The commercial REIT, which is managed by ARA Asset
Management Ltd, an affiliate of Cheung Kong (Holdings)
Ltd, previously acquired stakes in other offices, One
Raffles Quay, from the Hong Kong-listed property developer.
"This means that Suntec's future injection pipeline may be
limited as Cheung Kong has no further assets in Singapore,"
Credit Suisse said.
It maintains its 'underperform' rating and target price of
S$1.37, highlighting potential downside risk in net property
income due to disruption from upgrading works at its assets.
By 0254 GMT, Suntec REIT units were up 1.3 percent at
S$1.605, and have surged 49 percent since the start of the year,
outperforming the FTSE ST Real Estate Investment Trust's
33.8 percent rise.
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