We paid a visit to Ascendas REIT (A-REIT) and Mapletree Logistics Trust (MLT) properties located in Singapore's major industrial and business parks. We went away pleased with the respective landlords 'hands on' management of the properties and having a good grasp of tenants' requests and needs. Maintain BUY for AREIT (S$1.56) and MLT (S$0.44), which are trading at FY10-11DPU yields of c. 9% and 14% respectively.

A tour of selected MLT and AREIT properties. We visited a total of 8 selected industrial properties in Ascendas REIT (A-REIT) and Mapletree Logistics Trust (MLT) portfolio located in Singapore's major industrial and business parks. These properties ranged from business parks, hi-tech industrial buildings to logistics & warehouses (L%W).

Well maintained with stable occupancies. We are pleased to say that the properties we visited are well maintained and managed with on-site representatives to cater to tenants' needs and requests. As such, occupancy levels at A-REIT and MLT's portfolio have remained stable at around 99% over the past year, with strong retention rates of over 80% in FY08. Looking ahead, strong rapport with tenants and proactive leasing strategies established by MLT and A-REIT will likely sway tenants' decisions toward continuing staying put at their properties.

Asking rentals are easing but within expectations. In our discussions with the various asset managers, we understand that asking rents have eased generally. For business parks space and Hi-tech industrial space, asking rents have dipped slightly, since the peak, to S$2.80 ?S$3.50 psf pm. However, this is still above their respective average passing rents of c. S$2.55 psf pm and S$2.09 psf pm (as of reported in 3Q09). For L&W properties, we do not expect rates to fall significantly as it has remained relatively stable over the years.

TP for A-REIT raised to S$1.56, Maintain BUY on MLT, TP S$0.44. We continue to like an exposure to industrial space given its longer lease profile, will ensure more resilient earnings moving forward. Both A-REIT and MLT has 40% and 50% of its earnings locked in through long term sales and leaseback contracts. We roll forward our valuations for A-REIT to FY10, resulting in our adjusted target price of S$1.56.