A-REIT

A-REIT: DPU for quarter at 3.38c in-line with expectations. Rev at $121.7m +8.7% yoy +1.5% qoq. Net profit at $60.7m +39.9% yoy -11.4% qoq. Distributable income was higher at $69.5m +9.2% yoy +6.6% qoq. Co recorded a fair value gain of $11.3m in financial derivatives.

Higher rev was driven by completion of dev projects and acquisitions. Positive rental reversions of between 1.8% and 11.6% were achieved throughout all segments of the portfolio during the quarter. Occupancy rate has also improved to 96.4% for the portfolio and 93.0% for the multi-tenanted buildings from 96.2% and 92.5% in the previous quarter respectively.

A-REIT has about 6.7% of its gross revenue due for renewal, thereby providing a high degree of predictability in earnings. Co is on track to deliver 6.7% div yield expected by analysts’ consensus. Further catalyst possible from deploying debt capacity of $555m which is the difference of current gearing at 31.5% and limit of 40%.

DB maintains Buy with TP$2.28 expecting positive rent reversions to continue at 12-40% above that of current rents. CIMB maintains Outperform with TP$2.13.

DBS maintains Hold with TP$2.14 expecting higher income over nxt 12-18 mths.

Stanchart maintains Underperform with TP$1.82 highlighting A-REIT’s 8% YTD outperformance compared to SREIT sector and price to correct once a more cautious view of biz park and industrial segment is priced in.