Broker: Maybank Research Pte Ltd
Date of Report: July 28, 2026
Excerpt from Maybank Research Pte Ltd report
Report Summary
Stock Focus: ESR REIT (EREIT SP)
Action: BUY
12-month Target Price: SGD 3.00 (Current Price: SGD 2.48; Target implies +29% upside)
- Key Idea: ESR REIT’s disciplined capital recycling—divesting non-core, short-lease assets and acquiring higher-quality properties (notably in Australian logistics)—is driving portfolio quality and supporting sustainable dividend per unit (DPU) growth. The recent Australian logistics acquisition is expected to be 5.1% DPU-accretive.
- Performance Highlights: 1H26 DPU grew 2.4% YoY to SGD 0.1151, with robust 9.8% rental reversion and improved occupancy to 91.9%. Gearing improved to 41.4%. Cost of debt rose slightly but remains manageable.
- Strategic Outlook: Management targets further divestments of assets with short leases, focusing reinvestment on Australia and Japan due to more attractive opportunities. DPU forecasts for FY26/27 have been raised by 9.4%/5.4% on stronger JV contributions and lower borrowing costs.
- Key Catalysts: Timely completion of acquisitions and further divestments, continued positive rental reversions, and higher occupancy at under-leased properties.
- Risks: Normalization of funding costs, dilutive divestments, lease terminations, and weaker leasing demand especially in business parks or general industrial assets.
Implications: Investors are advised to BUY ESR REIT for its attractive risk-reward profile, strong DPU yields (9%+), and ongoing portfolio improvement via capital recycling and strategic overseas acquisitions.
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