KUALA LUMPUR (April 24): AllianceDBS Research has maintained its “Hold” rating on Pavilion REIT at RM1.58 with a higher target price of RM1.60 (from RM1.55) and said the REIT’s distributable income of RM62.3 million (+6.7% y-o-y, +5.4% qo- q) was in line at 25% of house/consensus forecasts.

In a note today, the research house said it expects rental reversions in FY15 to be milder at 8% relative to 9% in FY14 and 15% in FY13.

It said this was largely due to the softer spending outlook on weak consumer sentiment, as well as increasing retail space supply in Kuala Lumpur.

“Nevertheless, Pavilion KL mall’s prime location will provide some leverage in keeping occupancies high.

“After rolling forward the valuation base to 1Q, our target price is adjusted to RM1.60 (DDM-derived, cost of equity 7.1%, TG 1.25%),” it said.