Suntec REIT's units surged 3.36% during intraday trading on Wednesday, following news of a significant stake purchase by a major property player and a subsequent analyst upgrade.
Hongkong Land has acquired a 10.8% stake in the real estate investment trust this month, according to a UOB Kay Hian research note. The analyst suggests Hongkong Land is likely attracted to Suntec REIT's units trading at a substantial 20%-30% discount to its net asset value per unit of S$2.03. For Hongkong Land, expanding its presence in Singapore's commercial real estate market through this stake helps reduce its risk of being overly concentrated in Hong Kong and China.
The emergence of this deep-pocketed potential acquirer is seen offering an uplift and positive momentum for the REIT's unit price. In response to these developments, UOB Kay Hian upgraded its rating on Suntec REIT to "buy" from "hold" and raised its target price to S$1.71 from S$1.47.