Homepage
PR Newswire
21-09-2015, 11:11 PM
Looks like Ascendas REIT is paying premium price for a quality asset...
Areit is paying a 6.6% premium to the assets’ open-market value.
In return, the acquisition has turned it into the eighth-largest logistics landlord in Australia. We like the portfolio’s freehold
tenures and fixed rent escalations which are higher than the usual 2% in Singapore. What we are less keen on its method of financing.
Had it opted totally for debt funding, we reckon our FY3/17-18 DPU could be 15.4-15.8 cts instead of 15.1-15.5 cts on the 60:40
structure. We do not expect DPU growth in FY3/16 due to SGD 64m in acquisition-related costs. Applying our 7.25% yield target to
Areit’s FY3/17 DPU gives us a new TP of SGD2.08.
Areit is paying a 6.6% premium to the assets’ open-market value.
In return, the acquisition has turned it into the eighth-largest logistics landlord in Australia. We like the portfolio’s freehold
tenures and fixed rent escalations which are higher than the usual 2% in Singapore. What we are less keen on its method of financing.
Had it opted totally for debt funding, we reckon our FY3/17-18 DPU could be 15.4-15.8 cts instead of 15.1-15.5 cts on the 60:40
structure. We do not expect DPU growth in FY3/16 due to SGD 64m in acquisition-related costs. Applying our 7.25% yield target to
Areit’s FY3/17 DPU gives us a new TP of SGD2.08.