Singapore Stock Market News

Suntec REIT - Maiden voyage

StockFanatic
Publish date: Tue, 19 Nov 2013, 11:29 PM
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Suntec REIT (SUN) recently announced its first acquisition in Australia. Though this exercise is expected to be yield accretive, financing it solely through debt could potentially raise gearing to an undesirable level.

This acquisition could boost SUN's DPU by 4.7% with stable long-term income. However,

1) the resulting higher net gearing level,

2) foreign currency exposure and

3) forecasted yield from this property based on a higher-than-current market rental rate, could potentially offset the positive DPU uplift.

Maintain Outperform with unchanged DDM-based (discount rate of 7.9%) TP of S$1.91 as we await for more information from the upcoming analysts briefing on Monday.
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