Asset injections to drive yields higher for Pavilion REIT
KUALA LUMPUR: Analysts predict Pavilion Real Estate Investment Trust (REIT) to see a rerating soon driven by a potential asset injection in the form ofb the Pavilion Extension in early 2017.
The firm at Affin Hwang Investment Bank Bhd (AffinHwang Capital) calculated the extension to be yields-accretive to the portfolio and enhance shareholder returns with the prospects of higher dividends.
“We expect Pavilion REIT to see a re-rating driven by more certainty over the Pavilion Extension asset-injection plan (worth approximately RM806 million) in early 2017,” it detailed in a report yesterday on the group.
At a potential injection price of RM3,226 per square feet (psf), the extension is expected to further enhance Pavilion Mall’s net property income (NPI) yield from 9.5 per cent to about 10 per cent.
This, it said, was based on the assumption that the Extension will be able to fetch a higher average rental rate of RM27psf against Pavilion Mall’s rental rate of RM22psf currently.
“As such, we are lifting our 12-month target price to RM1.80 from RM1.48, and with 18 per cent upside potential and a 2015 estimate yield of 5.7 per cent, are upgrading Pavilion REIT to buy from holdD,” it added.
“We revise up our 2017E net profit by 4.5 per cent to account KUALA LUMPUR: Edaran Tan Chong Motor Sdn Bhd (ETCM), together with Tan Chong Express Auto Service Centre, have undertaken a service campaign to notify its customers to replace an airbag inflator module for the front passenger airbag of affected Nissan vehicles.
In a statement yesterday, ETCM said a total of 12,444 Nissan units in Malaysia were involved in the front passenger airbag inflator service campaign, including Nissan, XTrail, Teana and Liberty.
“All labour and replacement parts for this service will be for the extension’s nine-month contribution.”
AffinHwang Capital said it held a stronger conviction on this REIT owing to its sustainability of tenancies as well as strengthening yield-accretion.
“Our upgrade on PavREIT is driven by our higher conviction on two counts: the at no cost to owners,” said ETCM, the sole distributor and assembler of Nissan vehicles in Malaysia.
ETCM said the customer confidence and peace of mind were of utmost importance to the company, and deeply regretted any inconvenience this may caused its valued customers.
“We would like to reiterate that ETCM and Nissan are committed to a high level of customer safety, service and satisfaction, and are both working together to promptly address this,” it said. — Bernama sustainability of Pavilion REIT’s existing tenancies and yieldaccretion from management’s potential move to gear-up on the financing of the acquisition of Extension.
“As a result, PavILION REIT’s 2016-17E yield should improve from 5.5 to 5.6 per cent levels before our upgrade to 6.4 to 6.6 per cent post our upgrade, above the Malaysian REITs’ peer average of 6.1 to 6.2 per cent,” it affirmed.
“Notwithstanding the general threat on retail malls like outlet closure of less popular brands, Pavilion Mall continues to survive due to its positioning in the upper and upper-middle class categories and it being a lifestyle mall.”
ETCM, Centre launch campaign to notify customers to replace airbag inflator module