Attractive selling price. We viewed this sale positively as the selling price represented a 42.2% and 30.1% premium over the original purchase price and book value of SGD22.5m and SGD24.6m respectively. As of 31 March 2013, 6 Pioneer Walk is currently a two-storey ramp-up warehouse with an adjoining office and 40 car park lots, and has a remaining land tenure of 23 years .

Minimal impact on earnings. With the sale, AREIT's gross revenue and net profit interest (NPI) are expected to be reduced by SGD1.9m and SGD1.6m respectively. In relation to the trust's earnings, this translates to a mere drop of c.0.3% in its gross revenue and NPI.

Use of proceeds from divestment. According to Management, the deployment of proceeds from this divestment has not been finalized. They may be used to repay AREIT's existing debt or for general corporate and working capital purposes, and/or to distribute to unit holders.

Retain NEUTRAL outlook. As this sale is expected to have minimal impact on AREIT's earnings and outlook, we are maintaining our NEUTRAL rating on this counter, with an unchanged TP of SGD2.76 on the back of: i) the lack of new sizeable potential acquisition targets, ii) the stock's near-term dilution of c.7% as a result of the recent capital-raising exercise, and iii) the demanding valuation it is currently trading at (1.34x P/B and FY14's forecasted dividend yield of 5.2%) vs the market cap weighted industrial REITs yield of 5.5%.

Source: OSK