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DJ MARKET TALK: UOB-KayHian Cuts Singapore REITs' Target Prices
0147 GMT [Dow Jones] STOCK CALL: UOB-KayHian cuts target prices for Ascendas REIT (A17U.SG), CapitaCommercial Trust (C61U.SG), K-REIT Asia (K71U.SG), Suntec REIT (T82U.SG) by average of 14% to reflect higher cost of capital. Says credit and equity markets worldwide facing greater uncertainties given turbulence in U.S. subprime market, leading to wider yield spread for S-REITs against risk-free rate. New targets for A-REIT at S$2.73, CCT at S$3.04, K-REIT at S$2.86, Suntec REIT at S$2.06. Keeps Buy calls on all REITs except Suntec REIT, which remains at Hold. Despite cuts, brokerage says fundamentals of S-REITs remain intact; expects "further upside in capital values and rental rates, though the pace of increase should moderate as the government steps in and the visibility of new supply improves." In bid to ease crunch, Singapore government has been making available more office space through land sales, conversion of old government buildings for office use. (FKH)