SINGAPORE (Sept 10): CGS-CIMB is maintaining its “add” call on Ascendas Real Estate Investment Trust (AREIT) with a target price of $2.89.
This came on the back of the REIT announcing a private placement of 178 million units at $2.54 apiece to raise $452.1 million in proceeds to partly fund the proposed acquisition of a second UK logistics portfolio worth about $250 million, the proposed development of a new built to suit (BTS) property in Singapore worth $109 million, as well as to pare down $87.1 million of debt.
The placement price of $2.54 represents a 6.1% discount to the volume weighted average price as at Sept 6.
The REIT has yet to share any details about the transactions.
In a Friday report, analyst Lock Mun Yee says, “However, we note that the post-transaction asset under management (AUM) is expected to expand to $11.4 billion from $10.8 billion (after the recent UK acquisition and Singapore divestment), implying $639 million worth of asset purchases.”
After the placement and acquisitions, the analyst estimates the REIT’s gearing to increase slightly to 37.7% compared to 35.5% as at end-June.
In addition, the acquisition of the high quality properties in the second logistics portfolio would help strengthen the REIT’s positioning and platform in UK and enlarge its tenant base with more quality tenants.
“We expect the Singapore BTS development opportunity to also enable AREIT to grow its Singapore presence at a higher-than-market yield,” says Lock.
The analyst is keeping the estimates unchanged for now, as she awaits more details on the acquisitions.
“We continue to like AREIT for its size and stability,” adds Lock.
As at 10.40am, units in AREIT are trading 1 cent lower at $2.64 or 1.22 times FY19 book with a dividend yield of 6.20%.
