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UOBKH's Koh initiates coverage on UI Boustead REIT with $1.16 target price

The Edge Singapore
The Edge Singapore • 2 min read
UOBKH's Koh initiates coverage on UI Boustead REIT with $1.16 target price
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UOB Kay Hian's Jonathan Koh has initiated coverage on UI Boustead REIT with a "buy" call and $1.16 target price, with a view that it benefits from long-term leases with reputable blue chip tenants, and of course, an attractive yield of 8.2% for FY2027.

UIBREIT, which went public less than two months ago, owns a portfolio that comprises 23 properties, including 21 leasehold assets in Singapore and two freehold assets in Japan.

About 69.2% of its tenants operate in industries like electronics and IT, automotive, aerospace & avionics, life sciences, precision engineering, information & communication technology and e-commerce.

According to Koh, these are the sectors aligned with Singapore’s Industry Transformation Maps (ITM).

Among these tenants are Fortune 500 companies, with the top 10 tenants’ WALE averaging 8.4 years.

The top 10 tenants, which accounted for about 53.9% of the REIT's net property income, provides defensive strength, says Koh.

See also: Broker's Digest: Info-Tech Systems, UMS Integration, Beng Kuang, HRnetGroup, Centurion, Hong Leong Asia, Nam Cheong

The sponsor, UIB Holdings, has a vertically-integrated platform across the entire real estate value chain. Of the 21 Singapore properties, the sponsor developed all but one.

UIB Holdings has granted a voluntary right of first refusal to UIBREIT over its stabilised income producing business space, hi-specs industrial, logistics and general industrial real estate assets in the Asia Pacific region, with a total gross floor area of 19.6 million square feet now in the pipeline.

Koh points out that UIBREIT is the only capital recycling vehicle for the sponsor's pan-Asia stabilised logistics and industrial assets.

UIBREIT units, as at 9.42am, traded at 83 cents. It was listed at 88 cents.

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