OCBC initiates Frasers Commercial Trust (A48U.SG) at Buy with $0.17 fair value. Says, REIT's high quality assets (Singapore properties--52% of gross revenue--either high-quality commercial property located near CBD and high-tech business development at fringe area of central Singapore), strong sponsor (Fraser & Neave (F99.SG)) “will provide FCOT with an acquisition pipeline of potential assets.”
Notes stable income profile, growth potential; “FCOT enjoys a number of blue-chip long-tenure leases and master leases that provide long-term income stability...along with potential for rental upside.”
Adds, FCOT trading at 59% discount-to-book vs broader office-REITs trading at 30% discount-to-book. “This significant discount is unjustified, considering FCOT's high-quality assets, healthy balance sheet and its strong sponsor.”
Says $0.17 fair value translates to estimated total return of 12.6%. REIT +3.1% at $0.165.
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