Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST
Research House: JP Morgan Chase
Adds, buy would expose Suntec REIT to potential equity fundraising risks given that full debt financing would bring Suntec’s gearing to 47%, beyond optimal level of 40%.
Company Name: SUNTEC REAL ESTATE INV TRUST
Research House: JP Morgan Chase
JPMorgan downgrades Suntec REIT (T82U.SG) to Underweight from Neutral, cuts target price to $1.35 from $1.40, on proposed MBFC acquisition; “while MBFC is the best building in town, the estimated acquisition yield of 4.0% (inclusive of income support) is not enough compared to the trust’s cost of capital of 4.5%-4.7%.”
Adds, buy would expose Suntec REIT to potential equity fundraising risks given that full debt financing would bring Suntec’s gearing to 47%, beyond optimal level of 40%.
Adds, MBFC “the right asset, but not the right price," $2400 psf effective price “rather steep” given current market conditions, “especially as we expect the vacancy rate for Grade A office space to pick up in 2011 to almost 15%.” Adds, no surprises in 3Q results.
Shares down 1.9% at $1.53.
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