ALLIANCE Research Sdn Bhd initiated coverage of Quill Capita Trust (QCT) with an "outperform" rating, saying it has a defensive blue-chip tenancy profile and a strong parent in CapitaLand Ltd.
"With its tenants locked in for a long term on master lease agreements with step up agreements, the real estate investment trust (REIT) provides stable earnings with mild growth even without acquisitions," the local research firm said in a report yesterday.
"QCT management has proactively sought ways to improve asset quality and improve rental yield with some of its tenants, providing investors with further upsides for the future," it added.
Alliance Research said the strong multinational corporation presence in QCT tenancy profiles, with the likes of DHL, IBM, HSBC, BMW and Technip as its anchors, proves its earnings quality.
Alliance Research said the upside to QCT will come from aggressive acquisitions backed by its low gearing position and low financing costs.
"With a strong pipeline of office-related commercial properties, we believe there is room for yields to improve further amid its future acquisitions," it said, setting a target price of RM1.50 on the REIT.
By New Straits Times
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