Looking ahead, Lock expects First REIT’s earnings to continue growing on the back of a full year’s contributions from its 2017 acquisitions, and says these properties should add an estimated $5.3 million to annual revenue or about 5% to the topline of the trust.
She also highlights the potential for more new acquisitions given the trust’s strong balance sheet that points to low gearing and up to $400 million in syndicated secured financing facilities.
“We tweak our FY18-19 DPU estimates post the results and introduce our FY20 projections. Consequently, our DDM-based target price is raised to $1.44, after rolling forward our assumptions. First REIT is currently trading at 6.4% FY18F DPU yield and 1.38 times P/BV,” notes the analyst.
Meanwhile, OCBC continues to rate First REIT at “buy” while also lifting its fair value estimate on the trust to $1.48 from $1.44 previously after rolling forward its valuations and incorporating contributions from Siloam Hospitals Yogyakarta.
In a Friday note, OCBC analyst Joseph Ng says he expects First REIT to continue exploring yield-accretive assets for addition to its portfolio moving forward.
The analyst believes the REIT should be able to make two to three acquisitions this year as a base case, while a faster-than-expected rate of acquisitions could surprise on the upside and remains a “live possibility” at this juncture.
“In terms of valuations, we continue to observe value on a relative basis in comparison to Parkway Life REIT,” he adds.
As at 11.26am, units in First REIT are trading flat at $1.41.
