Saizen REIT

Saizen REIT: declared 1HFY14 DPU of 3.25cts (+3.2% h/h, +1.5% y/y), which translates to an annualized yield of 7.0%. For 2QFY14, gross revenue and net property income rose to ¥989m (+5.2% y/y) and ¥689m (+3.3%) respectively, due mainly to the acquisitions of 5 properties btwn Nov ’12 and Jun ’13, and partially offset by the divestment of a property in Mar ’13. The average occupancy rate of Saizen’s portfolio properties declined to 90.6% (2QFY13: 91.7%, 1QFY14: 91.2%) partly attributable to seasonal factors, but is expected to recover with the onset of the major leasing season from Feb-Apr. Overall rental reversion of new contracts for the quarter was marginally lower by ~0.5% from previous contracted rates, but were largely due to expired contracts entered prior to 2008. Upward reversions continued to be observed for expired contracts entered from 2010 onwards. As at Dec ’13, aggregate leverage was 38% with a weighted average loan interest rate of under 3%. The nearest loan maturity is in Feb ’18. In Dec, Saizen appointed Deloitte and Touche as an independent financial adviser to under a strategic review of options to enhance value for unitholders. Saizen’s NAV stands at $1.17, which translates to a valuation of 0.8x P/B.