CIP – REIT Morgans rates the stock as Hold

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Propertylink ((PLG)) has made an indicative proposal to acquire Centuria Industrial REIT. The proposal is a combination of scrip and cash and, Morgans observes, based on Propertylink’s last close implies a price of $3.03.

The proposal is by way of an off market takeover comprising 2.5327 PLG securities and $0.33 cash for each Centuria Industrial security. Morgans notes that in December 2017 Centuria Industrial acquired a 7.7% interest in PLG at $0.95.

The broker expects Centuria Industrial to be a target as it is one of the few listed A-REITs offering a pure exposure to Australian industrial property. The broker sets the target in line with the implied price of $3.03, up from $2.64.

Near-term catalysts relate to a superior bid emerging. Downside risk to forecasts include falls in asset prices, lease/tenant default and lack of access to funding. The broker retains a Hold rating.

Sector: Real Estate.

Target price is $3.03.Current Price is $2.97. Difference: $0.06 – (brackets indicate current price is over target). If CIP meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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