Saizen REIT

Saizen REIT: NRA Capital has an Overweight rating and raised TP to $1.07 (from $1.03), supported by a potential 20% upside with 6-7% dividend yield projection. House believes it is still too early to conclude the end of Abenomics given that steps are needed to reduce any negative impact on consumers from the increase in sales tax from 5% to 8% in Apr. On the other hand, NRA believes Japan's output will benefit from the recent sharp decline in the yen. In addition, the Blackstone Group agreed to buy GE Japan Corp.’s residential property business for more than JPY190b to expand its apartment holdings in Japan. Last month, Singapore’s GIC put US$1.7b into Tokyo commercial real estate and City Developments has acquired a JPY30.5b historical site in Tokyo as it steps up expansion plans overseas. Saizen’s net gearing inched up from 30% in 4Q14 to 30.5% mainly due to 2 new loans obtained. Recently, MAS has released the new ruling for REITs, allowing for an increase in gearing level from 38% to between 40% and 45%, these should provide headroom for loans growth and acquisition.