360 Industrial REIT guidance upgrade

About the author:

Author name:

By Fiona Buchanan

Job title:

Co-Head of Research, Senior Analyst

Date posted:

21 January 2015, 10:14 AM

Sectors Covered:

Property, AREITS

360 Industrial REIT (TIX) has upgraded FY15 earnings per unit (EPU) guidance pre result. TIX remains a High Conviction pick.

FY15 guidance has increased by 5% to 21.2cpu (vs Morgans at 21.5cpu). Distribution per unit (DPU) guidance stands at 20cpu which was upgraded at the end of 2014. At current prices the stock is yielding 7.8% (distributions paid quarterly).

Highlighting the strength of the portfolio and some reduced interest costs from capital management initiatives, TIX has also provided FY16 EPU guidance of 22cpu (+3.8% on FY15 and Morgans at 22.4cpu). FY16 DPU guidance is 21c (+5% on FY15 vs Morgans at 20.9c).

Investment view

TIX offers investors exposure to Australian industrial property with quality tenants (Woolworths the biggest tenant); cashflows supported by stable rents which are underpinned by long-term leases which average around 3.2% rental growth pa for a majority of leases; strong industry drivers; an attractive distribution yield; and future growth potential from new acquisitions.

We expect catalysts include further accretive acquisitions and potential ASX 200 index inclusion (medium term). We also highlight 360 Capital Group (as manager) continues to hold a 12% co-investment in the Fund. Our DCF currently sits around $2.60.

Interim result 

1H15 result due 30 January. The Fund will also release its bidder's statement in regards to the formal takeover offer it has made for Australian Industrial REIT (ANI).

More information

Morgans clients can login to view more analysis on 360 Industrial REIT. If you are interested in finding out more, please contact your Morgans adviser or nearest Morgans office.

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.