Aims AMP Capital REIT

Aims AMP Capital REIT (AAREIT): On its recent proposed 49% stake acquisition in Optus Centre for $215m, StanChart estimate the acquisition will be c.2% accretive, even if it is 40% funded with equity to keep leverage at c.36%. Management expects to fully debt-fund the acquisition, with at least 60% in AUD debt to provide a natural hedge against the AUD. House estimate this to be c.6-8% accretive, depending on the amount of AUD-debt drawn. However, leverage will rise to 37.7% from 25.2% currently, and reach c.42% upon completion of the ongoing redevelopment projects. StanChart assumes AAREIT to raise $86m of equity in the next 12 months to repay debt and keep leverage at c.36%, making the acquisition just c.2% accretive. AAREIT offers a 2014-16E DPU CAGR of 4.5%, the highest among industrial SREITs, and is currently trading at 1.0x NAV. StanChart lower its TP by 3% to $1.64 and maintain its OUTPERFORM rating.