K-REIT: Announced strong set of results which were inline. Property Income at $18.7m, +2.5% YoY and -12.6% QoQ, while Distributable income at $24.3m, +36.1% YoY and +4.7% QoQ. DPU for 1Q11 grew 34.6% YoY and 4.7% QoQ to 1.79c or 7.26c (5.5% yield) on an annualised basis respectively. Increase due to NPI which rose 7.6% and results of associated companies which increased 194% to $6.1m for 1Q11....
Increase in NPI was supported by contributions from the 50% interest in 275 George Street and office tower at 77 King Street, both in Aus, while significant increase in share of associates due to acquisition of 1/3 interest in BFC Dev, the holding Co. for MBFC Phase 1, which was acquired on 15 Dec10....
We note that REIT continues to maintain well-balanced lease profile with no more than 14.3% of portfolio expiring within a yr from 2011-15 and WALE for the portfolio stood at 8.7yrs. Gearing stood at a comfortable 37.4%, giving headway for further acquisition, and debt weighted average term to maturity stood at 3.9 yrs. At current price, grp trades at 0.88xP/B and an annualized 5.5% yield vs peers Suntec REIT at 0.85x P/B, 6% yield and CCT of 0.95x P/B, 5.46% yield....
Going forward, REIT tips office rental rates to maintain its uptrend, and will continue to optimise the performance of its assets, while pursuing opportunities for strategic acquisitions that will complement portfolio. CIMB maintains Neutral with $1.52 TP, while CS O/P, with $1.75 TP.
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