Starhill Global REIT (SGREIT) announced that it has proposed to acquire Myer Centre Adelaide, a freehold property in South Australia, for a purchase consideration of A$288m (~S$302.4m). Myer Centre Adelaide has a total area of 716k sq ft and comprises a retail centre (95% occupancy rate), three office buildings (93% occupancy rate) and four basement levels with 467 carpark lots. This asset will be purchased at an initial NPU yield of 6.6%.

SGREIT intends to fund this acquisition via a combination of internal working capital and external borrowings. This would raise its gearing from 28.6% to 35.3%. On a pro forma basis, management estimates that this acquisition would provide a 2.8% accretion to its DPU for the 12 months ended 31 Dec 2014.

As SGREIT will be releasing its 5QFY15 (changed financial year end from 31 Dec to 30 Jun) results next Wednesday, 29 Apr 2015 after trading hours, we opt to keep our estimates intact for now. Maintain BUY and S$0.93 fair value estimate on SGREIT.

Source: OCBC Research - 21 Apr 2015