FCOT

FCOT: the Reit is up 5% since the announcement of the KeyPoint sale. CIMB notes the sale at 3.1% yield for net proceeds of $358m is a major positive for FCOT. Believes FCOT is likely to use the funds for partial redemption of its 5.5% CPPU at parity, and use the remainder to pay donw loans and/or buy back shares (currently at depressed valuations of 0.7x P/B and 7-9% yields, subject to sh/h approval). Notes a 50% redemption of CPPU could add 15% to FY13’s DPU with a fairly comfortable resultant gearing of 35-36%. CIMB notes there is more value in the trust waiting to be unlocked. Says mgt is looking exit the Japanese mkt, where assets are collectively booked at $114m, while in Spore, FCOT was previously granted the right for an additional 16k sm of GFA for hotel use (350rms) at China Square Central, which could be sold to third parties or sponsor F&N. The house reiterates Outperform, raises TP to $1.14 from $0.96.