A-REIT

A-REIT: 1QFY14 results were in-line with average consensus, with distributable income of $85.2m (+11% y/y, +24% q/q) and DPU at 3.55 ¢ (+0.6% y/y, +16% q/q). This brings A-REIT’s annualized yield to 6.3%. Net property income at $108m (+7% y/y, +8% q/q) as the group achieved positive rental reversion, averaging 9.6%, across all segments of its portfolio. The group expects this trend to continue into FY14, albeit at a more moderate rate. The group’s underlying trends remained stable, although portfolio occupancy dipped slightly from 95.2% to 94.3% mainly due to the conversion of single-tenanted buildings to multi-tenanted buildings after the expiry of leases. During the quarter, embarked on three new asset enhancement projects at Techquest, LogisTech and Corporation Place to upgrade the respective building specifications and improve their marketability, which should contribute to enhancing returns. The group has also completed the proposed acquisition of A-REIT City@Jinqiao for total purchase consideration of $124.6m at of Jul13, which is its first property in Shanghai. Overall, underlying trends remained stable with a comfortable leverage ratio of 28.6%, while the groups weighted term of debt stands at 3.6 years. At current price of $2.24, A-REIT trades at a forward 1.15x P/B and 6.3% forward yield. Latest broker ratings as follow: Deutsche maintains Buy with $2.70 TP CIMB maintains O/p with $250 TP HSBC upgrades to O/w with $2.50 TP Nomura maintains Neutral with $2.24 TP OCBC maintains Buy with $2.45 TP Standard Chartered maintains In-line with $2.34 TP UOB Kay Hian maintains Buy with $2.73 TP