a-iTrust – DBSV

Growing presence in Hyderabad

• Proposed acquisition of portfolio of 5 buildings in Hyderabad

• Positives seen in deal; earnings accretion

• BUY Call maintained, TP adjusted to S$1.13 based on DDM

Deepens Hyderabad exposure. a-itrust proposes purchasing a portfolio of up to 5 buildings (2.2m sqft, +34% portfolio SBA) in Hyderabad, India for a total consideration of INR 8.5bn. The properties are located in an established IT Park – Hitec City 2 Special Economic Zone (“HTC2 SEZ”). The portfolio consists of two operating buildings, immediately acquired for INR 1.7bn (S$50.4m), while the remaining three are to be acquired progressively when they complete over 2012-2014. Through the vendor, a-itrust also has a right of first refusal to acquire up to another 1.16m sqft of SBA ( 4 buildings) in the future.

Positives on this deal. We are positive on this acquisition, aitrust will boost its portfolio in Hyderabad, enabling them to enjoy economies of scale, while the impact on distributions should be immediately accretive as operating buildings are currently trading at 100% occupancy, with established MNCs as tenants. We estimate initial yield to be c10% for the two operating buildings, comparing favorably against its implied yield of 8.5%. An attractive pipeline awaits a-itrust (3 pipeline acquisitions, 4 in a ROFR) , underpinning expected steady portfolio growth in the mid-longer term. We raise our earnings by c1-3% over FY12-13F, assuming a-itrust fund the acquisitions of three buildings (completed and under construction) via debt.

Growth visibility strengthens, BUY, TP S$1.13. We continue to like a-itrust for its growth trajectory. The trust offers an attractive DPU CAGR of 13% over FY11-13, underpinned by a growing portfolio. Currently offers a prospective yield of 7.3-9.3%. Maintain BUY.