Broker: CGS International
Date of Report: July 28, 2026

Excerpt from CGS International report.

Report Summary
Stock Focus: ESR-REIT (EREIT SP)
Action: ADD (Maintain)
Target Price: S$3.43
Current Price: S$2.48
Upside: 38.3%

• Key Investment View: CGS International maintains an ADD call on ESR-REIT with a target price of S\$3.43, implying a potential upside of 38.3% from the current price. The stock offers an attractive forecasted FY26 distribution yield of 8.8%.
• Highlights:
  • 1H26 core DPU grew 4.5% YoY to 11.25 Scts, despite income loss from divestments. Core DPU now forms 98% of total DPU, reflecting improved earnings quality.
  • Portfolio occupancy stood at 91.3%; strong positive rental reversions (+9.2% YoY), led by logistics (+13.2%).
  • Capital recycling is in progress: proceeds from divested assets will be redeployed into a Melbourne logistics portfolio (six freehold assets, first-year NPI yield 5.6–5.8%), mitigating income gap and supporting future DPU.
  • Gearing improved to 41.4% (expected to fall further after note redemption). All-in debt cost rose slightly to 3.52%, with 75.5% of debt at fixed rates. Management is comfortable with gearing in the low-40% range.
  • Asset enhancement initiatives (AEIs) at Tai Seng and 2 Fishery Port Road could drive incremental growth. Major lease at 29 Tai Seng could achieve full occupancy ahead of schedule.
  • No change to earnings forecasts; maintain positive stance on the back of attractive yield and visible capital recycling strategy.
• Risks: Downside risks include weaker-than-expected rental reversions and unforeseen market weakness in Australia.

Actionable Insight:
Investors seeking high yield and potential upside on capital recycling in logistics should consider ESR-REIT (EREIT SP) with a target price of S\$3.43 and ADD recommendation.

Above is an excerpt from a report by CGS International. Clients of CGS International can access the full research report from the broker’s website: CGS International research website.