Month: October 2007
Cambridge – DMG
– Results in line with projections. Cambridge posted Q3 distributable income of $8.8m (DPU 1.7cts), +10% qoq and 29% ahead of its IPO forecast, on a 25% yoy and 8% qoq rise in revenue to $13.5m. The improved results were due to additional contributions from new acquisitions. For the 9M, distributable bottomline came in at $24.2m or 72% of our full year forecast. – Added 6 properties to portfolio since beginning 07. For the 9M07, the group had acquired 6 buildings valued at $137m, bringing its portfolio to 33 properties. New contributions from these properties had boosted bottomline. It has another $190.5m of new purchases which are expected to be completed over the next 1 month. In all, these assets are expected to add about $25m rental revenue annually to topline. – A further $94m of MOUs. The key driver to DPU growth is new acquisitions. In this respect, the group has expanded its portfolio by $328m with another $94m of MOUs. Given the increasingly competitive domestic acquisition environment, CIT also plans to venture into Malaysia and China and could look to possibly invest offshore over the next 12 months. Recent $193.9m cash raising exercise via an issue of 276.9m new units has lowered gearing to 38% and has freed up $480m of debt headroom for the group to seek new buys. – Maintain Buy. Share price has retraced 26% from the recent high and at present, offers significant value in view of its stable and secure income profile and long lease life. FY08 yield of 8.6% is amongst the highest with the S-reit sector. Our price target of $0.94 is conservative and is based on discounting cashflow from existing portfolio and has not imputed earnings accretion from potential new purchases. Reiterate buy with potential upside of 33%.
ALLCO – DBS
ALLCO, DBS remains a BUY with target price $1.65
– Gearing after Keypoint stands at 47%. Following the completion of Keypoint acquisition, Allco’s gearing will increase from 33% to approximately 47%, a level that potentially inhibits further acquisitions in the near term and Allco may seek funding from the equity markets for future acquisitions.
– Positive rental reversions. The demand for Singapore’s office and retail space within CBD continues to outstrip supply over the near future. Allco is poised to benefit from this demand squeeze.
– Attractive yield play. Allco continues to enjoy exposure to the booming Singapore property sector (54.1%), Australia (32.8%) and Japan (13.1%). At current price, Allco offers investors an attractive 6.3% yield with potential upside when rental reversions kick in (54% and 30%) over FY08 – FY09.
– Maintain BUY with TP S$1.65. We continue to like Allco and maintain our BUY call with TP S$1.65 based on DCF valuation. Compared to other S-REITS, Allco is currently trading at a 25% discount to NAV of S$1.36.
CMT – SGX
CapitaMall Trust’s Private Placement Fully Subscribed
Raises approximately S$352.1 million at S$3.63 per unit
Singapore, 30 October 2007 – CapitaMall Trust Management Limited (“CMTML”), the manager of CapitaMall Trust (“CMT”), is pleased to inform that 97.0 million New Units have been fully subscribed by investors through a private placement (the “Private Placement”), at an issue price of S$3.63 per New Unit (the “Issue Price”), raising aggregate gross proceeds of approximately S$352.1 million. The Private Placement is expected to reduce CMT’s gearing from 40.7% to 34.9%.
The issue price of S$3.63 represents a discount of approximately 3.2% to CMT’s volume weighted average price of the existing units in CMT (“Units”), based on all trades in the Units on Singapore Exchange Securities Trading Limited (“SGX-ST”) for the full market day of 29 October 2007. The book building exercise by Joint Lead Managers and Underwriters, DBS Bank Limited (“DBS”) and UBS AG, acting through its business group, UBS Investment Bank (“UBS”), commenced in the evening of 29 October 2007, and closed at 6.00 pm (Singapore Time) on 30 October 2007. The total demand book comprised over 30 quality long-term institutional investors from Switzerland, off-shore United States, Europe, Asia and Australia.
Mr Pua Seck Guan, Chief Executive Officer of CMTML, said, “We would like to thank all investors who have subscribed for the New Units under the Private Placement. The support from a wide spectrum of property-focused local and international investors is indeed a testament of their confidence in our strong execution and delivery capabilities. With our strengthened debt capacity, we are now well-poised to pursue yield accretive acquisition opportunities in Singapore to deliver stable distributions and sustainable total returns to Unitholders. “
Status and Listing of the New Units
The New Units to be issued under the Private Placement will rank equal in all respects with the then existing units of CMT and will qualify for any distributions which may be paid for the period from the day the New Units are issued to 31 December 2007, as well as distributions thereafter. Subject to the SGX-ST granting its approval in-principle, the trading of the New Units on the SGX-ST is currently expected to commence on or about 7 November 2007.
CMT’s policy is to distribute its distributable income on a quarterly basis to Unitholders. The next distribution was originally scheduled to take place in respect of CMT’s third quarter distributable income for the period 1 July 2007 to 30 September 2007 (the “Scheduled Distribution”). However, in conjunction with the Private Placement, CMTML intends to declare, in lieu of the Scheduled Distribution, a distribution of CMT’s distributable income for the period from 1 July 2007 to the day immediately prior to the date on which New Units are issued under the Private Placement. The New Units will not be entitled to such distribution.
The next distribution thereafter will comprise CMT’s distributable income for the period from the day that New Units are issued pursuant to the Private Placement to 31 December 2007. Quarterly distributions will resume thereafter.
Source : SGX
Suntec – OCBC
ORQ to drive FY08 earnings
Results broadly in line. Suntec REIT (Suntec) reported 4Q07 revenue of S$51.1m; +14% YoY and +9% QoQ. Distributable income was equally strong at S$30.4m; +22% YoY and +1% QoQ. At the DPU level, growth was more moderate at +11% YoY and +1% QoQ to 2.12 cents. Growth was mainly due to the increase in office and retail revenue due to better rates and higher occupancy. However, higher property expenses specifically from higher property tax and property management fees eroded much of the better revenue. This led to NPI margin falling from to 71% from 73% in 3Q07 and 4Q06. The results were about 4.5% better than our estimates.
Revaluation gains of S$1.29bn. In the current quarter, Suntec re-valued its asset and has recognised a gain of S$1.29bn (or 40% YoY). Suntec attributed the bulk of the gains from its office assets. More importantly with the new valuation, Suntec’s gearing has dropped to 20% (from 24% at 3Q07). With a target gearing of 45%, based on its current asset value, Suntec could raise a further S$408m. As for its NTA, it now stands at S$2.20, which means that it is currently trading below book value.
Accretion from ORQ to kick-in in FY08. In a recent release, Suntec has revealed it will finance the ORQ acquisition with 10% equity (to the vendor, Cheung Kong), 48% convertible bond (CB) and the balance 42% straight debt. CB is a new innovative way of financing and one that could be viewed as a form of deferred payment. However, as Suntec has an option to redeem the CB, we consider it as debt. We estimate the average cost of funding of ORQ at about 3.2% and with ORQ NPI yield at 4.2%, we see strong accretion to Suntec in FY08. In light of this we have revised up our FY08F DPU from 8.8 cents to 10.4 cents and we are also introducing FY09F at 10.7 cents. Finally, we estimate the rental from ORQ to be about S$10.5psf/mth and with market rates at S$15psf/mth. So we see upside potential albeit in the middle term.
Maintain BUY and fair value of S$2.18. The investment case for Suntec is simple, strong rental reversions from under rented office space, earnings accretion from acquisitions and retail space to benefit from asset enhancement. More importantly, with a price to book of below 1.0x, we see the investment case for Suntec compelling. We maintain our BUY rating with a fair value of S$2.18.
Suntec – BT
Q4 distributable income for Suntec Reit up 22%
SUNTEC Reit has reported fourth-quarter income available for distribution of $30.4 million, an increase of 22.2 per cent from $24.8 million a year ago.
For the same July 1-Sept 30 period, Suntec Reit recorded gross revenue of $51.1 million, an increase of 13.7 per cent year-on-year. Net property income was up 12 per cent up at $36.6 million while distribution per unit (DPU) was 2.122 cents, up 11.3 per cent.
The Reit’s stake in Suntec City Mall and Office Towers contributes 87.4 per cent of its net property income (NPI) and it reported that Suntec office leases were secured at higher rental rates of between $11 and $13 per square foot (psf) per month, and the committed office occupancy at Suntec City is at 99.8 per cent.
Suntec Reit also reported that the committed retail passing rent at Suntec City Mall hit a new high of $10.46 psf per month.
The Reit, which also owns Park Mall and Chijmes, reported that the passing rents there rose to $6.60 psf per month and $10.68 psf per month respectively.
Suntec Reit also recognised a revaluation surplus of $677.5 million for the quarter after independent valuations of its porfolio was valued at $4.57 billion (as at Sept 30).
On a full-year basis (Oct 1, 2006 to Sept 30, 2007), income available for distribution was $115.4 million, up 21.6 per cent from $94.9 million in the corresponding period a year ago. Net property income was up 11.8 per cent at $140.6 million and DPU was up 11.8 per cent at 8.15 cents.
Based on the closing price of $1.84 on Oct 26, Suntec Reit’s distribution yield was 4.4 per cent, up 11.8 per cent compared to the previous year.
Yeo See Kiat, CEO of Reit manager ARA Trust Management said: ‘On the acquisition front, we have entered into an agreement to acquire one-third interest in One Raffles Quay which will be completed shortly.’
Suntec Reit’s other income revenue from A&P, pushcarts and kiosks for FY07 grew 10.2 per cent year-on-year, surpassing the $6 million mark.
For its current office portfolio, 26.8 per cent of leases are expected to expire next year, with 42.6 per cent expiring the following year.
For its retail portfolio, 30.4 per cent of the leases are expected to expire next year, with 23.4 per cent expiring the following year.
Suntec Reit ended the trading day yesterday at $1.84 per share, unchanged.