Analysis of K-REIT Asia (With New Acquisition and Rights Issue)

Current Price on 18th Oct 2011 = $0.93 ($0.893 after rights issue)
Data is assumed that rights issue is completed.

• Current Yield = 9.28% 
• Price-to-book Ratio = 0.744 
• Assets per unit = $2.094 (Might be slightly higher)
• Debt per unit = $0.894 (Might be slightly higher as well) 
• Gearing = 42.7% (include current liabilities which are not loans)
• Secured NAV = $0.306 (Assuming that Ocean Financial Centre is encumbered)

K-REIT Asia has announced a new acquisition and rights issue which would allow them to match CCT in terms of value of assets under their management. With the data provided, here are the analysis.

Yield has increased which is a good sign. Moreover, one is investing in high quality assets in a safe Singapore. So the yield is definitely quite appealing. However, the problem lies in its secured NAV. Previously they have a very high secured NAV (higher than their trading price). Because there were no further details to be found, I would need to assume that OFC is encumbered. This has drastically reduced its NAV to $0.306 which makes it very unattractive. Of course! This is only an assumption so let's see what they have in their next report (not the coming one).

With an extremely low price-to-book ratio and high yield, it has definitely fulfilled my criteria and I will be looking at investing in this REIT (over Lippo Malls due to geographical location).