– The equity fund raising, subject to unitholders’ approval at an Extraordinary General Meeting (EGM) scheduled for 25 September, will be through a private placement, which management expects to be completed by the end of October. The funding will be for acquisitions announced already, which comprise 1 Tuas Avenue 3, 9 Bukit Batok Street 22, 7 Ubi Close, 120 Pioneer Road, 48 Toh Guan Road East, and 23 Woodlands Terrace. We have already incorporated the estimated contributions from these target properties into our forecasts.

– We have not changed our acquisition assumption of S$500m for 2007, so the only change to our forecast lies in our equity-financing assumption. We now assume that Cambridge will raise the announced S$193.9m for 2007 (from our previous assumption of S$330m). The lighter-than-expected fund raising would leave it with an estimated leverage ratio of 48.4% at the end of the year, much higher than the estimated year-end leverage of 34.8%, based on our previous assumption. Instead of raising enough equity to meet its financing requirements up to late 2008, we now assume that Cambridge’s financing strategy will be to raise enough equity to tide itself over until early-to-mid 2008, when we expect another major equity financing exercise.

– With the change in our equity-financing assumption and the recovery of its unit price (we have raised our placement-price assumption to S$0.78, from S$0.75 previously) since our previous report (see Yield screams louder, published on 20 August), we have revised up our DPU forecasts by 3.0% for 2007, 6.0% for 2008 and 10.5% for 2009. We caution that our DPU forecasts are highly sensitive to price assumptions (due to their direct impact on the number of units outstanding) for future fund raising.

– We have raised our six-month target price, based on our RNG valuation method, to S$1.06 from S$0.98, due to our higher assumptions for the placement price and recurrent-leverage ratio (loan to asset) of 45% (from 40% previously).