Broker: Maybank Research Pte Ltd
Date of Report: July 28, 2026
Excerpt from Maybank Research Pte Ltd report.
Report Summary
Stock: ESR REIT (EREIT SP)
Action: BUY
Target Price: SGD 3.00 (current price SGD 2.48; upside +29%)
- Key Idea: ESR REIT continues to deliver on its disciplined capital recycling strategy, improving portfolio quality and supporting sustainable DPU (distribution per unit) growth.
- 1H26 results: DPU rose 2.4% YoY to SGD 0.1151, driven by strong 9.8% rental reversion and lower interest expense, despite divestments of non-core properties and a major Australian logistics acquisition.
- Portfolio: Rental reversion remains robust, especially in the logistics segment, with occupancy rising to 91.9%. Rental growth is expected to moderate but stay healthy at around 8.5% for FY26E, supported by AI-related demand.
- Financials: Gearing reduced to 41.4%. Cost of debt increased slightly to 3.52% but interest coverage improved to 2.6x. FY26–27E DPU forecasts have been raised by 9.4%/5.4% respectively.
- Outlook/Catalysts: The Australian logistics acquisitions are expected to be 5.1% DPU-accretive. Further upside could come from timely completion of acquisitions/divestments, and improved occupancy at key assets.
- Dividend yield: Attractive at 8–9%, with ROAE expected to reach 10.4% by FY28E.
Implications: Investors are advised to maintain a BUY position on ESR REIT for its clear capital recycling strategy, resilient rental growth, and strong yield outlook. The unchanged target price of SGD 3.00 implies significant upside potential and continued income growth from high-quality industrial assets.
Above is an excerpt from a report by Maybank Research Pte Ltd. Clients of Maybank Research Pte Ltd can access the full research report from the broker’s website.
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