AscottREIT - Ascott REIT target raised to $1.30 by Morgan Stanley

Stock Name: AscottREIT
Company Name: ASCOTT RESIDENCE TRUST
Research House: Morgan Stanly

Morgan Stanley lifts Ascott Residence Trust (A68U.SG) target price to $1.30 from $1.18, based on discounted cashflow valuation, to factor in value accretion stemming from $969.6 million purchase of 28 serviced residence properties from parent CapitaLand (C31.SG), says Dow Jones.



“We see improved earnings stability from diversification into Europe and from greater earnings contribution from master leases and guaranteed income contracts,” says Morgan Stanley.



But research house trims FY10-FY12 DPU estimates by 7.0%, 6.0%, 7.0% respectively to account for enlarged unit base as ART will partly fund purchase by selling new units. Keeps Equalweight call. Expects equity fund raising to cap any upside in near term.



REIT flat at $1.20.