Month: January 2008
MMP – BT
MMP Reit posts 15.7% rise in distributable income for Q4
MACQUARIE MEAG Prime Real Estate Investment Trust (MMP Reit) has reported a 15.7 per cent year-on-year rise in distributable income to $16.2 million for the fourth quarter ended Dec 31, 2007. The Q4 distribution brought 2007 full year’s distributable income to $59 million, up 7.5 per cent.
Distribution per unit (DPU) for the quarter rose 14.3 per cent to 1.68 cents, bringing full-year DPU to 6.19 cents, a rise of 6.9 per cent. ‘This is a result of our regional diversification strategy and focused asset management efforts,’ said Franklin Heng, CEO of MMP Reit’s manager Macquarie Pacific Star.
On an annualised basis, the latest distribution represents a yield of 6.06 per cent based on MMP Reit’s traded unit price of $1.10 on Dec 31, 2007. An increase in the valuations of MMP Reit’s portfolio of 10 properties raised group net asset value (NAV) per unit to $1.61 as at Dec 31, 2007, up 38.8 per cent from end-2006’s $1.16.
Gross revenue for Q4 2007 was $29.8 million, up 32.1 per cent year-on-year. This was due to higher rental rates from renewals, new leases and revenue from new acquisitions. Full-year gross revenue rose 14.6 per cent to $103 million. Net property income for Q4 rose 29.1 per cent to $22.1 million, despite higher year-on-year expenses. This brought full year’s net property income to $76.8 million, up 10.9 per cent. Mr Heng said: ‘As at Dec 31, 2007, our Singapore properties enjoyed full occupancy for retail space and 99 per cent occupancy for office space. The 79,100 square feet of office leases which expired in 2007 had average quarterly passing rents of $4.90 to $5.30 per square foot per month (psfpm) and these were renewed or contracted at average rents of $7.70 to $12.10 psfpm.’
MMP Reit’s portfolio includes a 74.23 per cent strata title interest in Wisma Atria and a 27.23 per cent strata title interest in Ngee Ann City. In 2007, it acquired seven prime properties in Tokyo and a retail property in Chengdu in China, growing its asset portfolio to $2.2 billion.
The Reit said it continues to exercise prudent capital management by maintaining a low gearing and strong balance sheet. ‘Our gearing of 29 per cent is at a healthy level. To shield MMP Reit from interest rate volatility, 89 per cent of our debt is fixed and the average interest rate is 2.69 per cent. Interest cover is 4.4 times. The recent establishment of a $2 billion multi-currency medium term note (MTN) programme will provide additional sources of funding,’ said Mr Heng.
On MMP Reit’s outlook, Stephen Girdis, chairman of Macquarie Pacific Star, said: ‘MMP Reit has in the past year laid the foundations for strong organic growth for the next couple of years, through its maiden acquisitions in Japan and China, and its tenancy remix and asset enhancement initiatives for MMP Reits’s Singapore properties, Wisma Atria and Ngee Ann City.’
CDLHTrust – BT
CDLHT Q4 distributable income up 83.4%
Trust hopes to add Copthorne Orchid to portfolio this year
CDL Hospitality Trusts (CDLHT), the biggest owner of hotel rooms in Singapore, yesterday posted strong Q4 and full-year results.
Distributable income for the quarter ended Dec 31, rose 83.4 per cent from a year before to $22.7 million. CDLHT, a stapled entity, is hoping to acquire this year Copthorne Orchid in the Bukit Timah area from parent Millennium & Copthorne Hotels, the London-listed hotel arm of Singapore property giant City Developments.
CDLHT’s plan is to build up its assets over three to five years from about $1.6 billion as at the end of last year to around $3 billion, with increasingly more overseas acquisitions.
‘My favourite acquisition markets at the moment are Singapore, Vietnam and India. These are high-octane growth markets,’ said Vincent Yeo, CEO of M&C Reit Management.
The company is the manager of CDL Hospitality Real Estate Investment Trust, which is stapled to CDL Hospitality Business Trust to form CDLHT.
With CDLHT’s current gearing ratio (debts-to-assets) only at about 19 per cent, it has debt headroom of $792 million to fund acquisitions before it reaches its self-imposed gearing threshold of 45 per cent.
‘Given our strong balance sheet position, we’re well placed to seize acquisition opportunities as they present themselves,’ Mr Yeo said.
CDLHT has a right of first refusal to buy parent M&C’s Singapore hotels. M&C owns the 445-unit Copthorne Orchid at Dunearn Road, as well as a 370-room new hotel being built in the Mohamed Sultan Road vicinity slated for opening in the first quarter of next year.
Mr Yeo indicated that CDLHT would like to acquire Copthorne Orchid this year ‘if it’s possible’. He reckons the property is worth over $200 million. ‘The ball is in M&C’s court … We’re waiting to hear from them,’ he added.
The trust would acquire the Mohamed Sultan hotel only after it has opened and even then, this is likely to include initial income support if necessary, he said.
Copthorne Orchid had once been earmarked for development into a condo but it now continues to operate as a hotel as there is a shortage of hotel rooms in Singapore.
When CDLHT launched its initial public offer in July 2006, it had four hotels Singapore in its portfolio – Orchard, Grand Copthorne Waterfront, Copthorne King’s and M. In June last year, it acquired Novotel Clarke Quay.
Revenue per available room for the four IPO hotels rose 33.5 per cent year-on-year to $195 in Q4 2007. That together with a full quarter’s contribution from Rendezvous Hotel Auckland (acquired in December 2006), and the contribution from Novotel Clarke Quay provided the fillip to CDLHT’s Q4 distributable income in the fourth quarter. Gross revenue jumped 65.2 per cent to $27.96 million in Q4 last year.
Unit holders will receive a total distribution per unit of 4.61 cents for the July 19-Dec 31 period, which works out to 10.14 cents on an annualised basis, reflecting a distribution yield of 4.97 per cent based on CDLHT’s $2.04 closing price yesterday, when the shares ended 8 cents lower.
For the year ended Dec 31, distributable income was $68.7 million, or 75.7 per cent above the trust’s forecast. Gross revenue of $90.65 million was also 61.1 per cent ahead of forecast.
CDLHTrust – UOBKH
Stellar 4QFY07. DPU increased by 56.8% yoy to 2.76 cts.
CDL Hospitality Trusts (CDREIT) posted 4QFY07 revenue of S$27.96m, 97.2% and 65.2% higher than IPO projection and 4QFY06 respectively. This is driven by both acquisition and strong RevPAR growth. CDREIT announced DPU of 2.76 cts, 56.8% yoy growth.
We continue to like the company’s exposure to the hospitality sector in Singapore and Pan-Asia. Reiterate BUY.
Revenue driven by both acquisition and RevPAR growth. The two acquisitions made after IPO, Rendezvous Auckland and Novotel Clarke Quay Hotel, contributed 27.2% of CDREIT’s total revenue. Its IPO portfolio has seen RevPAR yoy growth of 33.5% to S$195, driven by 32.7% yoy growth and 0.6ppt increase (to 88.6%) in average daily rates and occupancy rates respectively.
DPU of 2.76cts is 56.8% and 97% higher than 4QFY06 and IPO projection respectively. This translates into full year DPU of 8.98cts, or FY07 DPU yield of 4.4%.
CDREIT is the purest Singapore Hospitality REIT. With 5 well-located hotels or 2,324 hotel rooms in Singapore, CDREIT is set to benefit from the buoyant tourism sector in Singapore. As the biggest hotelier in terms of room number, it has 6.2% of total hotel room inventory in Singapore.
Buoyant tourism industry outlook in Singapore. Singapore registered 10.3m tourist arrivals, up 5.4% yoy in 2007, surpassing its target of 10.2m visitors. Total visitor days have surged 13.4% yoy to 38m. Various events as well as MICE (Meetings, Incentives, Conventions and Exhibitions) activities will attract tourists to visit Singapore in 08. We estimate that the shortage of hotel rooms will further lead to room rates hikes while maintaining occupancy rates at a high
80% level.
Well positioned for yield-accretive acquisitions in Pan-Asia. As of 4QFY07, CDREIT’s gearing ratio stood at 18.7%, which allows it to tap debt capacity of $792m (assuming 45% optimal debt ratio). Management indicated that they are continuously looking for possible acquisition opportunities in Pan-Asia and maintaining the acquisition target of $300m per year till 09. Singapore, India and Vietnam are CDREIT’s favourite markets, for their high growth in Hospitality sector. Given cap rates stabilizing due to the softening of the real estate market,
we believe that CDREIT can make further yield-accretive acquisitions in 08.
Maintain BUY. Our target price of S$2.66 is based on DCF model (WACC: 6.5%; terminal growth rate: 1.5%), after 1) roll over FY10 forecast; 2) edge up our forecast of RevPAR growth rate in 08 to 20%, 2ppt higher from our previous forecast; 3) increase WACC by 50bps due to higher risk premium and cost of debt assumption as a result of current volatile market. After the recent correction, CDREIT is trading at an attractive FY08 yield of 5.4%.
Cambridge – Phillip
Still Attractive
CIT reported its FY07 results that were largely in-line with our projections, backed by properties acquired during the past year. Gross revenue came in at S$53 million and net property income is S$45.8 million. CIT achieved a full year DPU of 6.262 cents. Net asset value increased from $0.67 to $0.76.
Results in-line with our estimates. Revenue came in within 1.5% of our forecast of S$52.3 million, net property income of S$45.8 million versus our forecast of S$45.9 million. Full year DPU is higher by 4% than our forecast of 6.02 cents.
Revenue growth backed by accretive acquisitions. CIT expanded its portfolio from 27 properties with an asset value of S$531 million to 40 properties worth S$928 million at year-end with the acquisition of 13 properties during the year. In January this year, CIT managed to seal another 2 deals and has signed $125.6 million worth of MOU.
Capital management strategy. During the results briefing, management laid out their capital management plan for the year. Since the successful equity fund raising in October last year, CIT gearing has lowered to 36% and it has $131 million in undrawn facility available. Management intends to take advantage of the low interest rate environment so as to lock in the low rate whenever possible. In the longer term, management intends to refinance through CMBS issues.
Plans ahead. Management remains confident on growing via acquisition whether locally or venturing overseas and reiterates its target of S$500 million worth of acquisition p.a.
Valuation and recommendation. The current market conditions may prove difficult for REIT to pursue growth via acquisition as the cost of equity increases. On hindsight, CIT managed to raised S$193.9 million and completed 7 acquisitions just before market sentiment turns awry. With gearing at 36% and $131 million in available credit facility, CIT has no worries about funding in the short term. We maintain our favourable stance on CIT. Our optimism in CIT stems from the stable underlying cash flow and DPU growth from potential accretive acquisitions. Fair value is lowered from $1.07 to $0.89 as we raised our assumptions for beta and risk premium to reflect volatile market condition and factor in conservatism.
Fortune – BT
Fortune Reit distribution income up 3% in 2007
FORTUNE Real Estate Investment Trust has announced distribution income of HK$284.8 million (S$51.8 million) for 2007, up 3 per cent from 2006.
Distribution per unit for the year ended Dec 31 edged up 2.5 per cent to HK$0.3512.
‘We are pleased that Fortune Reit’s portfolio of 11 retail malls delivered stable and sustainable growth for FY07,’ said Stephen Chu, chief executive of the Hong Kong-based Reit’s manager, ARA Asset Management.
‘This was driven by strong rental reversions of about 15.6 per cent for the whole year on a portfolio basis. Our pro-active asset management strategies, coupled with exciting promotional events in the malls, have contributed to healthy demand from tenants and shoppers.’
Fortune said that as of end-2007 its tax-exempt yield was 6.7 per cent, up from 5.8 per cent a year earlier. Strong rental reversions were driven by its Waldorf Garden Property, which was enhanced in August.
The average rental rate of the entire portfolio was 6.3 per cent higher at HK$25.23 psf at Dec 31, 2007, versus HK$23.74 psf a year earlier. Approximately 45 per cent of leases in the portfolio expire this year, creating a good opportunity for organic growth in a strong retail market, Fortune said.