The outlook is stable. This is due to the use of proceeds from the Rights Issue to pare down debt. At the Trust level, debt headroom is now higher and this is favourable for acquisitions. Debt headroom is ~S$110 mn by our estimate (assuming 40% target leverage), potentially growing the portfolio by 9%. For Unitholders, FY18e DPU from operations is expected to be lower YoY due to the 18% dilution from the Rights Issue. However, this can be mitigated if the manager utilises the debt headroom to make acquisitions.
Maintain Neutral; unchanged target price of $0.82
Our forecast remains largely unchanged. Despite the 18% dilution from the Rights Issue, our FY18e DPU is only 2.3% lower YoY as we have been factoring-in a one-off top-up payment following a favourable resolution to the 51 Alps Avenue dispute.
Our target price represents an implied FY17e P/NAV multiple of 1.10x, which compares against the FTSE REIT Index forward 12-months P/NAV multiple of 1.07x.