Ascendas REIT

Ascendas REIT: 4QFY13 results below consensus- - NPI declined 4.3% q/q to $100.1m; - 4QFY13 DPU declined 16% q/q to 3.06¢; FY13 DPU increased 1.3% y/y to 13.7¢; - Portfolio occupancy down 0.3ppt q/q to 94.0%; - Gearing at 28.4%; - Dividend yield 4.8%; Weak results driven by higher i) property tax; and ii) maintenance and conservancy costs; 3 projects unveiled and funding of $408m committed (of which $206.5m yet to be funded); i) Development of DBS Asia Hub Phase II (7,000 sqm to be added to existing building); ii) AEI at Techpoint; iii) AEI at 5 Toh Guan Road; 21% of revenues is due for renewal and mgmt expects positive reversion with spot prices 9-35% above passing rents; mgmt also guided that acquisitions in Singapore will be increasingly challenging and further growth opportunities may come in the form of Built-To-Suit (BTS) and development projects. Mgmt looking for growth opportunities in China’s Tier 1 cities (and cities such as Shenzhen and Guangzhou), as well as in Malaysia’s Iskandar (however, any acquisition will likely be in 2014). AREIT is currently trading at - 1.5x book value of $1.94/share as of end-March (vs. mean 1.35x); - 4.9% FY14e yield or 3.5ppts over the 10Y bond (vs. mean 4.5ppts); Broker recommendations- CS downgrades to UNDERPERFORM, TP of $2.48; DB downgrades to HOLD, TP of $2.76; Nomura maintains NEUTRAL, TP of $2.47; UOB Kay Hian maintains HOLD, TP of $2.86; CIMB maintains OUTPERFORM, TP of $3.05;