AIMS AMP Capital Industrial Reit (AAReit): FY11 results largely in-line. Net property income +31.3% as a result of acquisitions, while distribution income grew 66.5% to $37.2m. DPU however fell 61.3% to 1.98cts due to its enlarged share capital.
Macquarie notes that over the past two yrs, AAReit has right sized its balance sheet with a couple of rights issues and a pte placement; gearing of 32% is comfortable with interest cover of 5.7x, well above the min of 2.5x under bank loan covenant
Says AAReit, which has a portfolio comprising 26 Spore industrial properties, is trading at a 20% discount to its book value of $0.27, and offers a stable DPU yield of ~10%. Believes AAReit is a deep value small cap S-Reit that should appeal to high yield funds without liquidity constraints. Keeps Outperform rating and $0.27 target.
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