Suntec REIT

Suntec REIT: Post-placement of $350m to repay existing debt, Daiwa reiterates BUY rating but lowers TP to $1.92 (from $2.00). Following the placement, gearing should no longer be an issue for investors that were uncomfortable with Suntec’s financial position before. Although the purported reason for the placement is to repay debt, Daiwa believes there could be other considerations for the placement, such as an opportunity to buy over the remaining 39.2% stake in Suntec Singapore International Convention & Exhibition Centre or possibly an acquisition in Singapore. Daiwa estimates Suntec REIT to be trading at 5.6% distribution yield based on the current price of $1.69.