Broker: DBS Group Research
Date of Report: 28 July 2026
Excerpt from DBS Group Research report.
Report Summary
Stock Focus: ESR REIT (EREIT SP)
Action: BUY
12-Month Target Price: SGD3.10
Last Traded Price: SGD2.48
Key Highlights & Actionable Insights:
- Recommendation: Maintain BUY with a lower target price of SGD3.10. The target price implies a forward yield of approximately 6.9%–7.0% over the next two years.
- Key Strategy: EREIT is undergoing portfolio repositioning, divesting non-core Singapore assets (SGD440mn in 1H26) and redeploying proceeds into higher-yielding, longer-tenure assets, particularly freehold logistics properties in Australia and Japan. Quick redeployment into six Australian logistics assets (SGD295mn) is expected to be DPU-accretive and improve portfolio quality.
- Results: 1H26 DPU rose 2.4% year-on-year to 11.51 Scts, supported by stronger core earnings, positive rental reversions (+9.8%), and favourable AUD movements. Occupancy improved to 91.9% overall, with Singapore at 89.9%.
- Outlook & Risks: Near-term distributable income may face a modest drag due to timing mismatches between divestments and new acquisition contributions plus lower initial yields on new assets. However, the repositioning is expected to drive more sustainable earnings and NAV growth long-term. Key risk remains FX volatility on foreign income (JPY, AUD), although EREIT hedges this exposure.
- Financials: Gearing improved to 41.4% at end-1H26 and is expected to fall further after note redemption. FY26F DPU is 21.86 Scts, with yields near 8.8–8.9% and NAV per share at 253 Scts.
Investment Implication:
Investors are encouraged to accumulate EREIT for its stable yield, ongoing portfolio upgrade, and exposure to resilient logistics and industrial assets. Short-term earnings may be weighed by repositioning, but the long-term outlook remains constructive with improved asset quality and growth prospects. Maintain BUY.
Above is an excerpt from a report by DBS Group Research. Clients of DBS Group Research can access the full research report from the broker’s website:
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