AJA is an excellent investment opportunity. A-REITs are rerating first given their lower perceived risk. This, IMO will be followed by internationally focused REITs once value investing becomes difficult to find with A-REITs.
AJA should be attractive to many:
NTA 93c
ICR 3.7x
WALE 6.7yrs
Occupancy 94%
FY10 Distribution (min guidance) 7c
FY10 Operational earnings 9c (my guess based on FY09 11.8c) Non-recourse, asset level debt only
March 10 debt maturity (only 16% of total)
Available cash $31 mill + $30 mill temporarily held by hedge counterparty
Gearing of 69% will improve as assets revalue and $31 mill + surplus FY10 operational earnings (~9cpu-7cpu) are applied to debt reduction
Thus, AJA could expect over time to rerate as follows:
SP = NTA 93c SP = FY10 PEx10 = 90c SP = FY10 Distribution 10% = 70c
At current SP of 43c, FY10 yeild will be minimum of 16% AND there are very good prospects of strong capital gains, possibly in the order of 100% over 12 months.
AJA is still a bargin if your'e not already overweight in these (like I am!)
Cheers John
AJA Price at posting:
$4.30 Sentiment: Buy Disclosure: Held
