[ET Net News Agency, 20 January 2020] DBS Group Research lowered its target price for
Champion REIT (02778) to HK$5.47 from HK$5.8 and downgraded its rating to "hold" from
"buy".
The research house said occupancy at Three Garden Road has softened slightly to 92-93%
from June 2019's 95.8%, amid waning leasing demand from both Chinese firms and MNCs
(multinational corporations). An existing tenant has put its expansion plans on hold given
the market uncertainty.
The spot rate has retreated slightly to HK$125-130psf. In 2020, about 22% of leases are
expiring with another 14% up for rent review.
Given rising office vacancies in Central, Champion REIT is adopting a flexible leasing
strategy with an aim to maintain high occupancy. Nevertheless, with expiring rents of
HK$105psf, reversionary growth, though a moderation from FY2019's >25%, should remain
favourable at >15% in FY2020. (KL)