Company Name: K-REIT ASIA
| Research House: DBS Vickers | Price Call: BUY | Target Price: 1.21 |
Stock Name: SuntecReit
Company Name: SUNTEC REAL ESTATE INV TRUST
| Research House: DBS Vickers | Price Call: BUY | Target Price: 1.58 |
Brokers including DBS Vickers raised their price targets on Suntec Real Estate Investment Trust and K-REIT Asia after a restructuring that will result in tax savings for both property trusts.
Both trusts said last week the company that holds assets in the Marina Bay Financial Centre in Singapore had been
converted to a limited liability partnership. Income from the properties will not be subject to corporate tax as a result of the new structure, they said.
Suntec and K-REIT each owns a one-third stake in BFC Development LLP, which holds two office towers and an underground retail mall at MBFC.
On Tuesday, Suntec units were up 0.4% at $1.33, while K-REIT was flat at $1.01. So far this year, Suntec has gained nearly 24% while K-REIT has advanced almost 22%.
OCBC Investment Research said Suntec’s distribution per unit for 2012-2013 fiscal years may get a boost of 0.11 to 0.17 cents, which translates to a rise of 1.2 to 1.9%. It raised its target on Suntec REIT to S$1.23 from
$1.20, but held its hold rating.
“This is positive for unitholders as the distributable income is likely to be higher now that the income generated will
no longer be subject to corporate tax,” OCBC said.
DBS Vickers expects K-REIT and Suntec to reap tax savings of close to $2.2 million in 2012 fiscal year and $4.5 million in 2013, resulting in a DPU increase of 1-2% in 2012 and 4-5% in 2013.
It upgraded K-REIT Asia to buy from hold and raised its price target to $1.21 from $1.12. It also raised the target on Suntec REIT by 8.6% to S$1.58 and maintained its buy rating.
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