From the perspective of Lai, this transaction strengthens UIB REIT's portfolio resilience and income visibility, with portfolio WALE expected to improve from 5.8 years to 6.4 years, while Singapore exposure rises to 72% of assets under management.
Furthermore, the structure of this deal is such that the REIT, which was listed only in March, can choose to fully own this asset over time, thereby providing an additional medium-term acquisition pipeline, says Lai.
"Strategically, the acquisition deepens UIB REIT’s exposure towards specialised aerospace and high-spec industrial assets with higher barriers to entry, while showcasing the sponsor’s ability to originate proprietary development opportunities," says Lai.
Post transaction, UIB REIT's aggregate gearing is expected to rise to 39.7% post-transaction, still deemed by the analyst as "manageable".
DPU accretion, meanwhile, is estimated at 2.5%-2.9%, assuming a debt funded strategy.
"We view the transaction positively as it demonstrates UIB REIT's continued ability to originate proprietary build-to-suit opportunities alongside supportive sponsors, allowing the REIT to capture positive spreads from development of around 8.6% vs 7.4% portfolio yield for Singapore - securing long-term income streams," says Lai.
"The transaction also reinforces management's strategy of increasing exposure towards specialised industrial segments with higher barriers to entry and stronger tenant stickiness," he adds.
"With this development, we see an improvement in portfolio quality, driving a re-rating over time," says Lai.
Separately, Jonathan Koh of UOB Kay Hian notes that this aerospace park development and UIB Konan Phase 3, which was announced earlier, will begin contributions from 1QFY2028 and 1QFY2028 respectively.
Koh estimates that these two development projects will contribute earnings of $3.4 million in FY2029 and has therefore raised his DPU forecast by 3% to 7.3 cents for FY2029.
Koh has kept his "buy" call and has revised his target price for this counter to $1.17, up from $1.13.
UI Boustead REIT units as at 1.41 pm changed hands at 80 cents, down 1.24% thus far today. It is down from its 88 cents IPO price.
