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Ascendas India Trust
Overweight
AINT.SI, AIT SP
Announces its first big acquisition since listing.
Proposed acquisition of 5 buildings in Hyderabad for S$248M
• Acquisition of 5 buildings (2.2msf) in Hyderabad for S$250MM –
AIT has announced an acquisition of a portfolio of 5 buildings in Hitec
City 2 SEZ, Hyderabad from Phoenix Infocity Pvt. Ltd. The transaction
involves purchase of (a) 2 operational buildings of 0.4msf (100% leased
to tenants like Cognizant, HCL, I Gate) to be acquired immediately for
Rs1.7B (S$50.4M) (b) Remaining 3 under construction/proposed
buildings providing additional 1.8msf of space to be acquired for an
estimated Rs6.8B (S$197.4M). These proposed buildings are expected to
be progressively acquired once fully completed and leased (2012-2014).
In addition to this, AIT has a ROFR for additional 4 buildings (1.16msf)
of the landowner in the SEZ.
• Acquisition to be debt funded– These acquisitions are proposed to be
debt funded thereby taking AIT’s gearing to 22% from 19% (as of Dec-
10) on acquisition of the two completed buildings (0.4msf). Gearing will
further increase to ~33% on completion of entire acquisition (2.2msf). As
per the company, the trust has debt facilities in place to complete the
acquisition of the entire transaction.
• Entry yield at 10.7%, in line with market cap rates. Accretion to
FY12 DPU marginal at 2% – AIT's entry yield into the transaction is
~10.7%, which is pretty much inline with market rents. We estimate the
acquisition of the completed properties (0.4msf) should help boost the
trust’s annual net property income by Rs186MM/S$5.4M (~6% of FY12
JPMe NPI). With the acquisition being 100% debt funded (S$ debt), AIT
management expects the transaction to add 0.16 cents per unit implying
an accretion ~2% on our FY12 DPU. The remaining buildings have also
been agreed to be acquired at the same yield and will be DPU accretive
as and when acquired. We note that the NOI implies a market rent of
Rs39 psf, which is higher than the current market rents there (Ishaan
leasing at under Rs 35 psf).
• Strategically, targeting a 11 msf portfolio over next 4-5 years- AIT
currently has an operating portfolio of 5.9msf. Overall the target seems
to be a portfolio of ~11 msf over the next 4-5 years, driven by ongoing
developments and this new acquisition. This in turn should help achieve
some scale which in-turn should help AIT’s own cost of capital.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ascendas India Trust
Overweight
AINT.SI, AIT SP
Announces its first big acquisition since listing.
Proposed acquisition of 5 buildings in Hyderabad for S$248M
• Acquisition of 5 buildings (2.2msf) in Hyderabad for S$250MM –
AIT has announced an acquisition of a portfolio of 5 buildings in Hitec
City 2 SEZ, Hyderabad from Phoenix Infocity Pvt. Ltd. The transaction
involves purchase of (a) 2 operational buildings of 0.4msf (100% leased
to tenants like Cognizant, HCL, I Gate) to be acquired immediately for
Rs1.7B (S$50.4M) (b) Remaining 3 under construction/proposed
buildings providing additional 1.8msf of space to be acquired for an
estimated Rs6.8B (S$197.4M). These proposed buildings are expected to
be progressively acquired once fully completed and leased (2012-2014).
In addition to this, AIT has a ROFR for additional 4 buildings (1.16msf)
of the landowner in the SEZ.
• Acquisition to be debt funded– These acquisitions are proposed to be
debt funded thereby taking AIT’s gearing to 22% from 19% (as of Dec-
10) on acquisition of the two completed buildings (0.4msf). Gearing will
further increase to ~33% on completion of entire acquisition (2.2msf). As
per the company, the trust has debt facilities in place to complete the
acquisition of the entire transaction.
• Entry yield at 10.7%, in line with market cap rates. Accretion to
FY12 DPU marginal at 2% – AIT's entry yield into the transaction is
~10.7%, which is pretty much inline with market rents. We estimate the
acquisition of the completed properties (0.4msf) should help boost the
trust’s annual net property income by Rs186MM/S$5.4M (~6% of FY12
JPMe NPI). With the acquisition being 100% debt funded (S$ debt), AIT
management expects the transaction to add 0.16 cents per unit implying
an accretion ~2% on our FY12 DPU. The remaining buildings have also
been agreed to be acquired at the same yield and will be DPU accretive
as and when acquired. We note that the NOI implies a market rent of
Rs39 psf, which is higher than the current market rents there (Ishaan
leasing at under Rs 35 psf).
• Strategically, targeting a 11 msf portfolio over next 4-5 years- AIT
currently has an operating portfolio of 5.9msf. Overall the target seems
to be a portfolio of ~11 msf over the next 4-5 years, driven by ongoing
developments and this new acquisition. This in turn should help achieve
some scale which in-turn should help AIT’s own cost of capital.
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