A-REIT’s gross revenue jumps 8.7% YoY to S$112.9 mln

The company also reported DPU of 3.01S¢ for 4QFY11.

The DPU is in-line with DMG Research’s estimate of 3.1S¢.

The rise in revenue was mainly due to maiden contribution from the newly operational 5 Changi Business Park Crescent beginning Feb 2011.

The research firm noted, however, that the gain was offset by higher property opex in 4QFY11 caused by lower vacancy refund on property tax, higher maintenance and conservancy charges, and higher land rent.

DMG Research has revised its FY12F-FY13F DPU by -0.6%-6.4% respectively, after factoring in A-REIT’s recent private placement which saw 206m new shares being issued, and the company’s potential S$200mln acquisition.

In a statement, DMG Research said the strong positive revaluation “reinforces belief of positive rental reversion.”

“Backed by rising asset prices evidenced by A-REIT’s huge property revaluation gain of S$345m in FY11, we believe A-REIT will be experiencing positive rental reversion for new lease contracts in FY12.

Our view is further reinforced by the rising trend of average market rents for business/industrial units in Singapore,” the research firm said.

DMG Research added it sees A-REIT as likely having more overseas acquisitions due to a healthy debt headroom of S$540mln.

As of March 2011, A-REIT has a gearing of 35%. The research firm is assuming a maximum gearing of 45%.

“With the financial flexibility, A-REIT will be able to undertake more acquisitions/development projects. In particular, we believe A-REIT is actively looking to acquire more assets in China’s first tier cities such as the recent forward purchase of Jinqiao Export and Processing Zone in Shanghai.

However,acquisitions will be limited to the extent that overseas assets will account for ≤20% of total portfolio,” DMG Research said.