Potential acquisition of The Seletar Mall to boost SPH REIT's yields

There could be a 3-4% DPU upside post acquisition.

Analysts at DBS Group Research believe it is the opportune time for SPH REIT to consider snapping up The Seletar Mall for around $500m within the next six months prior to the completion of mall's first renewal cycle at the end of the year.

"We believe there is room for rental uplift, and hence SPH REIT can benefit from this if it acquires The Seletar Mall before the renewal period," the analysts noted.

Here's more from DBS Group Research:

Following the acquisition, there could be a 3-4% lift in DPUs on the assumption of an optimal funding scenario which involves a partial equity fund raising of $200m.

Post acquisition, gearing will increase slightly from 26% to 31% but still conservative compared to the peer average of 34%. Most importantly, the stock’s liquidity should improve, which will be positive for stock prices.