Extracts fm DBSVickers Report dated 19-Oct-05,

2Q06 Results - Potential gearing boost

AREIT announced 2Q06 DPU (FYE March) of S2.91 cts (up 25% y-o-y, 2.5% q-o-q) which was within expectations. Gross revenue of S$51.6m was up 77% y-o-y from S$29.2m and net property income rose 94% y-o-y to S$41.1m from S$21.2m. AREIT recently raised S$240m in new equity; S$217m from the public through a 1-for-20 preferential offering and private placement, and S$23m in new consideration units issued to Ascendas Land (AREIT’s parent) for its Techview property. An impending catalyst could occur in the near term when the Monetary Authority of Singapore (MAS) announces its decision on the possibility of raising gearing limits to 60%. AREIT’s DPU could potentially rise by 8-14% at gearing levels of 40-45% with fully debt-funded acquisitions. We maintain our BUY recommendation and yield-spread based target price of S$2.32.

• 2Q06 results within expectations. The improved performance was due to the acquisition of yield-accretive properties and steadily rising occupancy rates for its multi-tenanted properties, from 88.5% to 89.7% q-o-q. A cumulative distribution of S3.03cts will be paid out from 1 July 2005 to 4 Oct 2005. The new units will be issued on 5 Oct 2005. 
  
• Gearing catalyst. We believe the Monetary Authority of Singapore (MAS) will soon announce its decision on the proposed changes to REIT guidelines, specifically the raising of gearing limits to 60%. AREIT’s management has reiterated it would maintain a 40-45% gearing level even if the limit was set at 60%. If AREIT raises its gearing level to between 40-45%, we estimate its DPU could rise by 8-14% from acquisitions that are fully debt-funded. (See table for impact on DPU at different gearing levels)
  
• Maintain BUY. Meanwhile, there is potentially another S$3.3bn worth of investment grade industrial properties in Singapore to be added to A-REIT. The management said earlier that they could add another S$2-3bn worth of assets in the next 2-3 years. Maintain BUY recommendation based on a yield-spread based target price of S$2.32. This is supported by our DCF-based valuation of S$2.12. (See inside) Our valuation assumes further acquisitions worth S$670m in FY06. We advise investors to invest in AREIT for what it is--a low risk and stable income yielding stock.

Extracts fm CIMB Report dated 19-Oct-05,

• In line. Areit reported a good set of results with 2Q06 gross revenue surging 77% yoy to S$52m and distributable net profit up 84% to S$34m. Distribution per unit (DPU) was 2.91cts, up 25% yoy. DPU growth was led by new acquisitions (26 new buildings from Oct 04 to Sep 05) and a stable existing portfolio. DPU rose 2.4% qoq as its portfolio grew from 43 to 45 buildings.
  
• Minimal impact on DPU from rising interest rates. Areit hedged 69% of its total debt of S$763m for a weighted average term of 4.1 years. In addition, a two-year interest rate cap for S$127.5m is also in place. Average all-up funding cost is 2.97%. Current gearing is 32.7%. Interest cover remains healthy at 7.5x. With only 15% of its debt exposed to floating rates, we expect minimal impact from rising interest rates.
  
• Reduced acquisition pipeline, yields may compress. We are raising our FY06 DPU forecast to 11.6cts from 11.4cts as completed acquisitions were higher than expected. However, we are cutting our forecasts for FY07-08 by 2-4% as we lower our acquisition pipeline and yield expectations. Areit has completed a total of S$396m of acquisitions YTD and announced another S$131m of deals to be completed in the next six months. Management expects to announce another S$500-600m of acquisitions in the next 12 months, and hinted that with competition, yield compression may be imminent. To be prudent, we now expect Areit to acquire another S$600m of acquisitions over FY07-10, down from our previous S$800m estimate, and at a yield of 6.8% (from 7.0%). This pipeline has upside potential should it decide to venture overseas.
  
• Target price cut to S$2.33 from S$2.50, but still attractive. With rising interest rates, we are fine-tuning our cost of equity assumption to 6% from 5.8%. Our revised DDM-based target price is S$2.33, and including the dividend yield, will give a total return of 17%. Hence we maintain our Outperform call. Areit currently trades at a 5.6% distribution yield based on its estimated DPU of 11.4cts for FY06. We are expecting more acquisitions to raise that to 6.2% in FY07. It is still the highest yielding local REIT, and hence has the highest buffer against rising government bond yields.

Monday October 17, 8:27 AM
Singapore Ascendas-MGM Funds Management Chairman On Leave

SINGAPORE (Dow Jones)--Lew Syn Pau, chairman of Ascendas-MGM Funds Management Ltd.'s board of directors, has taken a leave of absence, the company said Monday. Ascendas-MGM, which manages Ascendas Real Estate Investment Trust, said Lew's leave began Friday and will last until further notice. In the interim, board member David Wong Cheong Fook will act as chairman, Ascendas-MGM said.

Local media reported last week that Lew, a former member of Parliament and current president of the Singapore Manufacturers' Federation, has been charged in court with breaching the Companies Act in his dealings with listed Broadway Industrial Group Ltd. (B69.SG).

Lew's pre-trial conference is expected to take place on Oct. 21.

SINGAPORE (Dow Jones)--Ascendas Real Estate Investment Trust's (A17U.SG) overall portfolio occupancy rate stood at 94.9% at the end of its fiscal second quarter ended Sept. 30, unchanged from end-June 2005, but up from 92.7% a year ago. During the quarter, renewed and signed new leases amounted to a total net lettable area of 25,429 square meters.

Extracts fm CitiGroup report

• AREIT is acquiring JEL Centre for S$11m (S$118psf).
  
• JEL is a 4-storey warehouse cum ancillary office in the Changi North Industrial Area.
  
• The building was completed in Aug 04 and has a 60-year tenure commencing Nov 03
  
• Asset size is S$2.5bn following this acquisition, appears on track to achieve our target S$2.8bn by Mar 06
  
• The acquisition appears accretive and is expected to add 0.02 cent to DPU pa, assuming it is funded 30% via borrowings and 70% via equity
  
• JEL, which is in the trading and distribution of photographic products and consumer goods, will lease back the building for 10 years with annual stepped rental increases
  
• The acquisition is likely to be funded via borrowings, as with 30.2% gearing following its recent equity raising, AREIT has additional debt capacity to fund another S$193m-worth of new acquisitions, given the gearing cap of 35%.
  
• We continue to like AREIT as: (a) it offers one of the highest yield among Singapore REITs; and (b) it looks well positioned to grow via acquisitions

-- Edited by KK at 13:38, 2005-10-11

Extract fm SGX,

Issue of 112,676,056 New Units in A-REIT - Raising gross proceeds of $240.0 million

Further to its press release dated 25 August 2005 in relation to the proposed acquisition of 12 properties (the “Acquisitions”) and its announcement dated 3 October 2005 in relation to the results of A-REIT’s equity fund raising exercise (the “Equity Fund Raising”) undertaken to partly finance the Acquisitions, the Board of Directors of Ascendas-MGM Funds Management Limited (the “Manager”), the manager of A-REIT, wishes to announce that an aggregate of 112,676,056 new units in A-REIT (“New Units”) at an issue price of S$2.13 per Unit have been issued today. These New Units will commence trading under the main stock counter, Ascendasreit (ISIN Code: SG1M77906915), on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”) at 2.00 p.m. today.

The 112,676,056 New Units comprise an aggregate of 101,832,114 units issued pursuant to the Equity Fund Raising and 10,843,942 New Units issued as partial consideration for the acquisition of Techview, one of the aforementioned 12 properties, in accordance with the relevant sale and purchase agreement. With this issue of New Units, the total number of units on issue is 1,276,323,231.

The Manager will make separate announcements as the funds are disbursed to complete the remaining 10 acquisitions (see separate announcements for completion of SENKEE Logistics Hub acquisition dated 23 September 2005 and completion of Techview acquisition dated 5 October 2005).

Status of the New Units

The New Units will rank pari passu in all respects with the then existing units in A-REIT (“Units”), including the right to any distributions which may be paid for the period from 5 October 2005, which is the date the New Units are issued, to 31 December 2005 as well as all distributions thereafter.

Ascendas, OSK Hope To Float REIT In Malaysia

SINGAPORE (Dow Jones)--Singapore's industrial park developer Ascendas Pte. Ltd. Monday said it will set up a joint venture with Malaysian financial services firm OSK Holdings Bhd. (5053.KU) to explore the possibility of floating a real estate investment trust in Malaysia.

Ascendas said in a statement the two companies will set up a fund management company that will apply to Malaysia's Securities Commission for REIT status with the aim of setting up a listed REIT comprising mostly office assets.

OSK will hold 51% of the joint venture, to be called Ascendas-OSK Funds Management Sdn. Bhd., while Ascendas will hold the remaining 49%.

(MORE TO FOLLOW) Dow Jones Newswires

October 03, 2005 03:41 ET

Ascendas, OSK Hope To Float REIT In Malaysia -2-

Ascendas Chief Executive Chong Siak Ching said in a statement: "The business space market in Malaysia has continued to strengthen on the back of growing demand from overseas companies as well as the buoyant banking and call center sectors."

Office space occupancy remains high at over 80%, she said, adding that recent changes in REIT regulations have provided the impetus for the Singapore company to actively explore opportunities in Malaysia.

Ascendas, which is best known for its business parks in Singapore, China and India, is a unit of JTC Corp., the Singapore government agency tasked with developing the island's industrial land.

Ascendas is already active in the REIT market, managing Ascendas Real Estate Investment Trust (A17U.SG) through a joint venture with Australia's Macquarie Goodman Management Ltd.