Tuesday, November 30, 2010

Suntec Reit

Suntec Reit: raised S$417.9m net proceeds from issuing 313m new units (17% of existing share base) at S$1.37/unit, to partially fund its S$1.5b purchase of one-third stake in MBFC. Issue price was at the upper end of the S$1.34-1.38 indicative range. The private placement attracted institutional investors and was 3.1x oversubscribed. Trading in the new units expected to start 9 Dec…

The remainder of the MBFC purchase will be financed through a $1,105m debt facility. Suntec’s gearing is expected to rise from 32.4% to 40.6% in 2011, giving it an acquisition headroom of approximately $542m before hitting 45% gearing (the target for most S-Reits). Suntec though may gear up to a max of 60%...

Overall the acquisition is expected to be marginally yield accretive, with mgt guiding for DPU to rise from 8.61 cts to 8.7 cts in FY11E.
UOB maintains Hold with $1.60 target.
StanChart maintains Outperform with $1.58 target.

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