Compiled by Navin Sregantan
ASCOTT RESIDENCE TRUST | HOLD (MAINTAINED)
JULY 4 CLOSE: $1.31
TARGET PRICE: $1.25
Maybank Kim Eng, July 4
Ascott Residence Trust (ART) has swiftly announced a merger with Ascendas Hospitality Trust (AHT) in a widely anticipated exercise, following the completion of its sponsor's acquisition of Ascendas-Singbridge last week.
The $1.2 billion merger with AHT will be done via a trust scheme at a gross exchange ratio of 0.836 times, with 5 per cent of the consideration funded by cash and the remaining 95 per cent in ART units.
The combined Reit aims for inclusion in the FTSE EPRA Nareit Developed Index, in line with the higher developed market Ebitda (earnings before interest, tax, depreciation and amortisation) concentration (from 75 per cent to 82 per cent) and a 50 per cent jump in free float from $1.6 billion to $2.4 billion - above the $1.7 billion index threshold.
The increased assets under management could support medium term distribution per unit (DPU) growth upside on synergies. Near-term, a key re-rating catalyst will need to be led by broader investor interest with the higher trading liquidity in its shares.
We have kept forecasts unchanged for now - both DPU growth profile and visibility remain supported by a similar balance of stable and growth income.
FRASERS LOGISTICS & INDUSTRIAL TRUST | HOLD (MAINTAINED)
JULY 4 CLOSE: $1.24
TARGET PRICE: $1.20
OCBC Investment Research, July 4
Frasers Logistics & Industrial Trust (FLT) has proposed to acquire nine logistics properties in Germany and three logistics properties in Australia from its sponsor Frasers Property Limited.
The 12 properties are freehold, 100 per cent occupied, have a young age of 3.7 years and long weighed average lease expiry (Wale) of 8.6 years.
The agreed property purchase price for this portfolio is about A$644.7 million (S$614 million). We estimate the initial net property income yield for this acquisition to be about 5.1 per cent.
We are positive on this transaction given the solid portfolio metrics and the strategic location within the major logistics hubs of Germany and Australia.
Furthermore, this transaction is also expected to be distribution per unit accretive.
Pending details of the final funding structure and an approval at the extraordinary general meeting, we keep our forecasts for now.
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