Putting Trust in REIT stocks (Others: Mid Caps)

Brokers' take: UOBKH and CGS-CIMB positive on Lendlease Reit's acquisition of Jem

UOB Kay Hian (UOBKH) and CGS-CIMB are positive on Lendlease Global Commercial Reit's (LReit) acquisition of the remaining interest in Jem mall it did not yet own.
This comes after the real estate investment trust (Reit) proposed to acquire the remaining 68.2 per cent stake in the prime Jurong property for a value of S$2.08 billion on Feb 15.

In a research report on Wednesday (Feb 16), UOBKH maintained its "buy" call on the Reit and increased its target price to S$1.08 from S$1.03. This comes after the research house raised terminal growth expectations for LReit by 0.2 per cent to 1.2 per cent, from 1 per cent previously.



Jem acquisition enhances portfolio resilience, say analysts

Analysts from CGS-CIMB Research and UOB Kay Hian agree that the acquisition of the remaining stake in Jem by Lendlease Global Commercial REIT (LREIT) is positive on all counts.

CGS-CIMB’s Eing Kar Mei and Lock Mun Yee have reiterated their “add” call as they see the accretive acquisition to enhance LREIT’s income stability through the diversification and higher exposure to the suburban retail sector.

They have, however, lowered their target price to 95.4 cents from 95.6 cents on an expected higher base as the REIT intends to fund the acquisition via an equity fund raising, amongst other means.

On Feb 15, LREIT announced that it would be increasing its stake in Jem to 100% from 31.8% previously.


Jem acquisition adds income stability, defensiveness to LREIT

Lendlease Global Commercial REIT’s (LREIT) manager announced on Feb 14, that the REIT plans to acquire the remaining stake of Jem it doesn’t own for $2,079 million. With the acquisition, LREIT will own 100% of Jem and give the REIT exposure to Singapore’s defensive suburban retail sector. Jem will double LREIT’s deposited property value to $3.6 billion.
Singapore will account for 88% of assets, and Europe 12%. Of this, Jem retail accounts for 46.8%, Jem office 12.9%, European office 12%, and prime Orchard Road retail 28.3%. Jem would also add a certain defensiveness and income stability because of its long weighted average lease expiry (WALE).

The acquisition would be 10.5% accretive to DPU based on equity fund raising comprising 1.26 billion new units at 82 cents ($1.037 billion) and the REIT’s 1HFY2022 performance. The remaining amount will likely be financed by debt.


Analysts continue to like Netlink, but warn of risks from upcoming ICO pricing review

Analysts from CGS-CIMB Research and Maybank Securities have maintained their “buy” and “add” calls on Netlink NBN Trust, with unchanged target prices of $1.10 and $1.13 respectively.

To CGS-CIMB’s Ong Kang Chuen, Netlink reported a “solid set of numbers” for the 3QFY2022 ended December, with its results coming in line with consensus’ expectations.
On Feb 14, Netlink reported a 3QFY2022 net profit of $25.7 million, which is 4.1% higher y-o-y, despite a 1.2% y-o-y decline in revenue.

According to Netlink, the higher net profit was due to the faster growth in fibre connection revenues, which more than offset the lower revenues for Netlink’s diversion and central office segments. Its residential segment saw 7,000 net additions, reaching 1.46 million connections, up 1% y-o-y and 0.5% q-o-q.

Non-residential connections also saw stronger additions, and now stand at 49,800, which is up 1.4% q-o-q and 3.7% y-o-y.

Stellar 4Q 2021 Results Propelled Sasseur REIT
to Deliver Record High FY 2021 DPU of 7.104 Singapore Cents, Well Surpassing pre-COVID-19 Levels

• Record high FY 2021 distributable income and DPU represents third consecutive year of growth1, reflecting strength and resilience of innovative and unique EMA model
• Sales surged 16.6% q-o-q and 12.3% in FY 2021, despite COVID-19 disruptions
• Property valuation rose by 9.1%2 y-o-y to S$1.80 billion, lifting NAV per unit by
8.2% to 98.94 Singapore cents
• Lowest gearing amongst all S-REITs at 26.1% provides considerable debt headroom to pursue potential acquisition opportunities
• Stellar results affirm Sasseur REIT’s position as a proxy to China’s strong domestic market


CDLHT in £24.1m deal for 4-star hotel in Manchester, UK

CDL Hospitality Trusts (CDLHT) CDL HTrust: J85 -0.82% has indirectly acquired a 4-star hotel in Manchester, the United Kingdom. The total acquisition cost is about £24.1 million (S$43.8 million).

The purchase consideration, which is subject to post-completion adjustments, amounts to £4.3 million - of which £3 million has been paid to the seller of the property. The remaining £1.3 million has been retained until certain conditions are met.

The move allows the stapled group – which owns lifestyle hotels like W Singapore - Sentosa Cove and Studio M Hotel in Singapore – to further penetrate the lifestyle hotel market, the managers said in a bourse filing.


ARA US Hospitality Trust posts stronger 3Q amid strong summer travel surge


UOB remains ‘overweight’ on hospitality S-REITs; recommends ‘buy’ on ART, CDLHT, FEHT

UOB Kay Hian Research analyst Jonathan Koh maintains an ‘overweight’ rating, with recommendations to “buy” Ascott Residence Trust (ART), CDL Hospitality Trust (CDLHT) and Far East Hospitality Trust (FEHT).

He has given them target prices of $1.29, $1.45 and 76 cents respectively.

“We have weathered the Covid-19 pandemic for two years already. During this time, the speed of detecting new variants has accelerated, and effective vaccines and anti-viral drugs, such as Pfizer Paxlovid have been developed,” says Koh in his Feb 22 report. “Bookings for hotels and serviced residences are expected to pick up as the overcast from the Omicron variant fades as well.”

Singapore also has one of the highest vaccination rates in the world, where Singaporeans overcame vaccine hesitancy and are well adapted to living with Covid-19 as an endemic.

As of 19 Feb 2022, 92% of the total population had completed their full regimen and received at least two doses of Covid-19 vaccines, of which 66% have received their booster shots, according to Koh.


PhillipCapital keeps 'accumulate' call and TP of 94 cents on LREIT after acquisition of remaining interest in Jem

PhillipCapital analyst Natalie Ong has kept her “accumulate” call on Lendlease Global Commercial REIT (LREIT) after the REIT proposed to acquire the remaining interest it does not own in Jem on Feb 15.

In her report on Feb 23, Ong notes that the proposed acquisition will double LREIT’s assets under management (AUM) and market capitalisation, propelling it to become one of the top 20 Singapore REITs (S-REITs).

However “the large quantum of the acquisition necessitates equity fundraising, which carries a higher cost of capital, making this leg of the Jem acquisition less accretive compared to previous rounds,” she says.

“Based on our forecast, the acquisition of the remaining 86.15% stake in Jem is marginally accretive at 0.1%, in line with the pro-forma distribution per unit (DPU) accretion of 0.1-3.0%,” she adds.

To this end, Ong has increased her DPU estimate for the FY2022 and FY2023 by 1.7% and 0.3% respectively, while her DPU estimates for FY2024-FY2026 were lowered by 0.4%-1.1% due to the REIT’s enlarged share base.


Big big...BB.😀Sasseur Reit

11,000,000...x 820) ...Good results! Hope the unit rebounds...+5,000,000 +today 3,000,000.

😀11,000,000...x 820) ...Good results! Hope the unit rebounds...+5,000,000 +today 3,000,000.

CGS-CIMB, Maybank Securities and DBS Group Research analysts have kept their add and buy calls.

Forum Jump:

Users browsing this thread: 1 Guest(s)