Stock Name: K-REIT
Company Name: K-REIT ASIA
Research House: Citigroup
“Valuing the existing 73% strata interest at $2,430psf would raise our current NAV estimate of $1.76/unit by $0.03/unit. With the stock currently trading at 0.9X book and 0.7X NAV, we maintain our Buy rating.”
Company Name: K-REIT ASIA
Research House: Citigroup
K-REIT (K71U.SG) is flat at $1.29, after saying it will buy four floors of Prudential Tower for $125.1 million. Nomura says it sees two potential strategic positives as a result of this buy: a majority stake (over 90%) in Prudential Tower allows K-REIT to undertake asset enhancement initiatives to enhance the longer-term competitiveness of the property; a valuation lift for the 73% strata interest already owned, (valued at $1,950psf at end-2010).
“Valuing the existing 73% strata interest at $2,430psf would raise our current NAV estimate of $1.76/unit by $0.03/unit. With the stock currently trading at 0.9X book and 0.7X NAV, we maintain our Buy rating.”
Citigroup maintains its Sell rating; following the buy it estimates DPU will be enhanced by 2-3%, and raises its target price correspondingly to US$1.20 ($1.52) from US$1.18.
“Despite the sell-off, we believe yields are not compelling as yet and prefer Suntec REIT (T82U.SG) and CCT (C61U.SG), which offers FY12E yields of 6.0% and 5.7% respectively vs FY12E yield of 5.1% for K-REIT”.
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