This devt is DPU accretive, with pro-forma DPU accretion of 0.28cts (no comments on the yield; we estimate ~8-8.2%) and 2% net profit contribution, assuming fully debt funded and held for the whole of FY09E. The stability of the long lease, high credit quality of Singtel and absence of leasing risk could justify a tighter yield. It has commented that it may fund the devt by debt and/or equity. AREIT currently has 51% of unutilized bilateral banking credit facilities of S$1,120m and may issue notes from its recently established S$$1bn MTN prog Gearing could potentially rise to around 37.4% (fr 35.5%) assuming full debt funding.
AREITs development activities provides a competitive advantage in delivering DPU growth even in the absence of open market acquisitions. It has historically achieved avg 35% value accretion upon completion (although this is unlikely to be achieved for this transaction), and this may offset book value erosion from potential revaluation deficits. We maintain our Buy with TP of S$1.80. AREIT is currently yielding 9.5% for FY10E.
Sponsored Links
No comments:
Post a Comment