Derek Tan, an analyst from DBS, maintained the Hold rating on Keppel Pacific Oak US REIT (CMOU – Research Report). The associated price target is $0.21.
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Derek Tan’s rating is based on several key observations regarding Keppel Pacific Oak US REIT’s current performance and future prospects. The REIT has shown signs of stabilization in its operating metrics, with a notable increase in occupancy rates to approximately 91% in the first half of 2024. This improvement is supported by successful refinancing efforts, which have provided the REIT with greater financial flexibility by extending the debt maturing in 2024-2025.
Moreover, while the REIT’s assets are concentrated in US technology hubs such as Seattle, Austin, and Denver, which contribute significantly to its net property income, there is an acknowledgment of the potential risk posed by a slowdown in the tech sector. Despite these challenges, the REIT has maintained stable performance over recent volatile years, with increasing leasing activity building up cash flows. The decision to upgrade the stock to a Hold rating, with a target price of USD 0.21, reflects confidence in its improved financial stability and a reduced likelihood of asset sales amidst the current subdued market conditions.