A-Reit

A-Reit: will acquire The Galen at 61 Science Park Road for $126m from sponsor Ascendas, roughly at par with independent valuations. Total acq cost of $127m will be funded using the proceeds from the earlier placement, and this one of the two properties mgt had ear marked to acquire earlier. The property is currently 97.5% occupied with 4,896 sm (22% NLA of 21,775 sm) leased to the sponsor. Completion is expected to take place end Mar ’13 and a land lease of 66 yr tenure will be granted. Deutsche expects NPI yield of 6.8% to be DPU accretive (+0.4%), assuming full funding by placement proceeds and 80% of base fee in cash, 20% in units. Notes this acq enhances A-Reit’s foothold in the science park segment (11 properties in total, 16% of portfolio value) with opportunities to realize operational efficiencies and economies of scale. The house keeps its Buy rating and TP $2.70.