• UOA Real Estate Investment Trust (UOAR) commenced its operations in December 2005 and has now expanded its property portfolio to 6 buildings spanned across Kuala Lumpur, Damansara Heights, and Bangsar South.

• Properties are located in strategic locations coupled with the alignment of interest with UOA Development Bhd granted few long-term competitive edges against its peers.

• We initiate coverage on UOAR with a BUY call and fair value of RM1.40, based on 14.0x P/E pegged to its forward FY23f EPS of 10.0 sen. 

Investment Highlights

• Properties are located in prime locations. UOAR’s building portfolio span across the ‘Golden Triangle’ of Kuala Lumpur, the MSC Cybercentre at Damansara and Bangsar South. We like the strategic location of the buildings, coupled with the good connectivity to public transport which serve as key advantages of office buildings.

• High occupancy rate. The occupancy rate ranged within 78.0%-99.0% in FY16-FY19 prior to the Covid-19 pandemic indicates a considerable demand for the premises under the proven investment and operation strategies implemented by UOAR. As Covid-19 is entering the endemic phase, we expect the occupancy rate to recover gradually over the next few years in tandem with economy reopening.

• Acquisition opportunities. UOAR was granted the Right of First Refusal over UOA Development Bhd’s (the Sponsor) investment assets. Through the Sponsor, UOAR has access to a network with leading participants in the real estate industry. These relationships provide the group a fairly decent competitive edge against its peers as they assist the Group in identifying acquisition opportunities with favourable returns as well as under-performing assets.

Source: Mplus Research - 7 Jun 2022