K-Reit Asia

K-Reit Asia: Grp reported 3Q results which were within expectations on back of higher office occupancy and rental rates. 3Q10 Net Property Income rose 42.4% YoY, while Net distributable Income increased 26.3% YoY, with occupancy rate at 99.1%. DPU for 9mthSept currently at 4.65c, translating to an annualized yield of 6.22c and a distribution yield of 4.8% vs YTD09 of 4.3%, however we note that QoQ, annualized distribution yield fell 10.3%....

Management expects positive economic growth in region to sustain office sector recovery and aims to pursue opportunities for acquisitions in SG and Pan-Asia. With proposed acquisition of 1/3 stake in MBFC, management expects enlarge asset size to reduce cost of borrowing and expects it to add on to its forecasted DPU of 6.68c (+10.2%) for FY11. Grp currently trades at 0.91P/B vs peers Suntec REIT of 0.86X and Capital Commercial Trust of 1.39x P/B.