A-Reit

A-Reit: 1QFY13 results inline to slightly ahead of expectations. DPU came in at 3.53 cts, +10.3% yoy, +1% qoq. Revenue rose 18.4% yoy on acq/devt projects, driving a 13.9% increase in NPI and 16.1% increase in distributable income. Overall portfolio occupancy improved to 94.6% from 94.3% in 4Q12 but was flat on a same store basis for the portfolio. On avg, the portfolio achieved positive rental reversions of ~11.6%.Mgt noted that current market rents are still 16-35% above A-Reit’s current wt avg passing rents, with enquiries from the precision engg, transport, food pdts and telco industries remaining firm. Leverage was 32.7% as at end Jun, and mgt expects this to increase to 35% after all committed spending. Mgt is comfortable with leverage going up to 40%, giving it $500-600m in debt headroom for further acq. StanChart reiterates Outperform with TP $2.22. Likes the 6.6% FY13e yield. Deutsche keeps at Buy with TP $2.23, with valuations at 1.2x P/B. likes A-Reit’s steady underlying growth profile, underpinned by a well diversified tenant base, WALE of 4 yrs, with only 9.1% of revenue up for renewal this financial yr, and 38% of total leases having long term periodic rental escalations.