HEKTAR net yield is about 6.2%, higher than IGB's 5.4%. Attractive?

I was reading up on YTLREIT and came across this analysis of impending new units on YTLREIT.  Keep in mind current DPU is around 8 sen/share.  Also keep in mind this is posted under "Comments" section....

Source

The primary objective of the REIT manager is to ensure the Placement Units are done at optimum prices which reflect the fundamental value of YTLREIT.

The announcement in changing the revaluation of investment properties from triennially to once a year and seeking for additional six months will provide more time to conclude the exercise are steps in the right direction.

The objective is to raise up to RM 800 mil with increase in fund size from 1,324 mil units to maximum of 2,125 mil units. The placement price will be around RM 1.00 per unit if fund size were up to maximum to raise the RM 800 mil proceeds.

In determining the placement price, if you use the current market price as a yardstick, it is at a discount of 26.7% to its current NAV. It is wide gap.

The earning per unit (EPU) up to 3rd Q of FY 14 was 3.71 sen per unit, if the 4th Q EPU is similar to 3rd Q at 1.19 sen per unit. Then the P/E of 18.88 (92.5/4.9) is relative high. Other REITs are in the region of 10 to 14.

The dilution of EPU and income distribution per unit (DPU) after placement exercise will depend very much on place price and YTLREIT future earning potential.

At RM 1.00 per unit, 800mil new units will be issued to raise the required RM 800mil. Repayment of loans with the placement proceeds will reduce interest charges. The total borrowings will reduce by 51% from RM 1.58 bil to RM 0.78 bil. Interest saving per quarter can be around RM 9.24 mil, per annum will be in the region of RM 37 mil which is quite substantial.

Assuming the exercise is completed by end of FY 14 and its FY15 PBT mirrors previous year 3Q result at RM 16.6 mil, annual PBT plus interest saving will come to RM 103.4mil (16.6x4+37). For simplicity, PAT say around RM 100mil, EPU will be 4.7 sen per unit. Annualized depreciation charge is around RM 65mil, which work out around 3.1 sen per unit. Income distribution per unit will be around 7.8 sen per unit.

Based on the above conservative approach of no improvement in earning with maximum placement units to raise the RM 800mil, the dilution impact is not substantial.

A revaluation of unit price is possible if there is a visibility of better earning ahead, especially if the coming 4Q shows better result. This revaluation will improve the placement price and reduce the total number of new units to be issued for the placement exercise.

Changed of auditors for Arreit fr BDO to KPMG