In a Thursday report, analyst Chua Su Tye says the DPU accretion – while marginal – bolsters A-REIT’s Singapore business park assets under management (AUM) by 5%.
Going forward, he expects further momentum in the REIT’s overseas diversification initiatives to drive upside to Maybank’s FY19-21E 2.8% DPU CAGR.
Chua is also positive on A-REIT’s newly announced deal with Grab, which will see the development of a $181.2 million build-to-suit (BTS) property for Grab’s new headquarters at one-north to house all of its Singapore employees.
“Management expects it [the BTS project] to generate a 6.4% NPI yield, which we estimate will lift FY21 DPUs marginally (<0.5%). It importantly strengthens A-REIT’s Singapore business parks AUM (by 5% to $3.8 billion), whilst management looks to scale up its UK portfolio with other accretive single-asset deals,” he comments.
As at 11:28am, units in A-REIT are trading 2 cents lower at $2.70 to imply 1.19 times FY19E DPU yield.
