A-reit’s 2Q08 results were within expectations.
Revenue and distributable income improving by about 4% sequentially to $80.2m and $46.5m respectively lifted by better rental and occupancy levels, particularly for business parks space. Looking ahead, DPU growth would be underpinned by organic improvement from existing portfolio, new contributions from $98m of new buys and $338m of development projects, to be progressively completed from early 2008.
A-reit is currently trading at FY08 and FY09 yields of 5.9-6.4% and at relatively steep P/book NAV of 1.6x. Maintain Hold recommendation with a fair value price target of $2.66, translating to a potential 11% upside.
<------- Recommendation by DMG
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