OCBC is looking after its "purchase" on Frasers Commercial Trust (FCOT) given its current share value fall on instabilities over restoration leases.
Year to date, FCOT's share cost has declined by 0.8%, failing to meet expectations the FTSE ST REIT Index and STI which have ascended by 4.0% and 9.2% individually.
In a March 14 report, lead investigator Andy Wong Teck Ching ascribes the underperformance to rent reestablishment vulnerabilities for inhabitants, Hewlett-Packard (HP) Singapore and Hewlett-Packard Enterprise Singapore, at its Alexandra Technopark (ATP) property.
The leases will lapse in Nov 2017 and Sep/Nov 2017 individually and both HP elements contributed 17.5% of FCOT's gross rental wage, as at end Dec 2016.
From what OCBC comprehends, HP has not settled on a choice on reestablishing its leases.
Be that as it may, HP is utilizing 2.1 million sf of space in Singapore and its new worked to-suit extend at Telok Blangah, which is 100% rented from Mapletree Industrial Trust, just has an aggregate GFA of 824,500 sf.
"Subsequently, we trust it is impossible HP will abandon its whole premises at ATP," says Wong.
"We conservatively expect just incomplete reestablishment by HP, and lower our FY18 inhabitance suspicion at ATP from 95% to 80%. Our FY18 DPU figure is thus cut by 9.0%."
In 4Q16, Singapore's Grade B office leases in the CBD center and islandwide declined by 2.1% and 2.0% q-o-q separately, in view of information from CBRE.
Both spoke to seven continuous quarters of decay, yet the size of reduction was like 3Q16.
"Henceforth we trust the workplace market is hinting at balancing out," says Wong.
Units of FCOT are exchanging 1 penny higher at $1.26.
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