Month: June 2010
KGT – BT
K-Green sees solid first day
Keppel’s trust is the fourth most active stock with 33.6m shares traded
SINGAPORE’S first green infrastructure trust, K-Green Trust, put in a robust performance in the opening hours of its debut yesterday, before slipping to close lower.
The Singapore Exchange (SGX) said that it welcomed the new listing.
K-Green, Keppel Corp’s trust targeted at investing in green infrastructure projects here and globally, touched a high of $1.33 within the first half hour of its trading debut. It then slipped to close the day at $1.11.
The counter saw strong volumes yesterday, being the fourth most active, with a total of 33.6 million units changing hands.
‘Investors are keen on buying the stock mostly because of its good dividend yield and long-term prospects for the green business,’ a local trader told Reuters.
DBS Vickers has rated K-Green a ‘hold’, with a 12-month target price of $1.20.
K-Green owns three assets: the Senoko Waste-to-Energy Plant, the Keppel Seghers Tuas Waste-to-Energy Plant and the Ulu Pandan NEWater Plant. The Senoko and Keppel Seghers plants treat close to half of Singapore’s incinerable waste.
Keppel has said that K-Green’s objective is to invest in ‘green’ infrastructure assets in Singapore and globally, with a focus on Asia, Europe and the Middle East. The trust aims to provide ‘long-term, regular and predictable distributions to its unit holders’.
K-Green’s pro forma net book value, as at June 29, 2010, was about $719.4 million.
Thomas Pang, CEO of Keppel Infrastructure Fund Management Pte Ltd, trustee manager of K-Green Trust, said: ‘With growing awareness in environmental issues worldwide, there is greater demand for ‘green’ infrastructure assets. K-Green Trust is well-placed to capture these opportunities in the global drive towards sustainable development, therefore offering investors opportunities to participate directly in this growing market segment.’
Keppel did not raise any new funds with this listing. Instead, it distributed 325.9 million units in K-Green Trust to entitled shareholders of Keppel – one unit for every five Keppel shares held. The units had an implied value of $1.13 each.
This proposed dividend in specie forms part of Keppel’s total dividend of 61 cents per share that it is proposing to offer to shareholders for FY2009.
The distributed K-Green units represent 50.5 per cent of the total number of trust units. The remaining stake is held by K-Green’s sponsor, Keppel Integrated Engineering Limited.
A statement from the SGX after the close of trade yesterday said that it welcomed K-Green to the market. ‘It underlines our attractiveness as a listing venue for the fast growing sector of infrastructure assets in Asia,’ said Lawrence Wong, executive vice-president and head of listings at SGX.
According to SGX’s statement, K-Green is expected to have an estimated market capitalisation of $730 million.
Its listing brings the total number of infrastructure business trusts on SGX to three, with a combined market capitalisation of close to $1.5 billion.
CCT – Lim and Tan
Sector In Favor
• Moody’s has upgraded CCT’s rating outlook to Positive from Stable, although CCT’s corporate family rating and unsecured debt rating are left unchanged at Baa2 and Baa3 respectively.
• At $1.22 yesterday, CCT is at a new post-crisis high, much like Keppel Land ($4.01, up 6). K-Reit is however still below the year’s high.
• The commendable performance of office-related stocks can be attributed to the growing consensus that office rentals have started to recover, as fears of oversupply recede.
• Rents for Grade A office space averaged $8 psf in Q1 ’10, marginally lower (1.2%) than the preceding quarter’s $8. But the rate of decline is way below the 20% drop between Q3 ’08 and Q4 ’08, which coincided with the Lehman Brothers collapse.
• Occupancy, on the other hand, actually rose in Q1 ’10, albeit a marginal 0.8% to 91.9%, vs 97.6% in Q3 ’08.
• As for supply, which is estimated to total 3.7 mln sf till 2016, or 0.6 mln sf a year, it is encouraging to see demand pick up, to 0.24 mln sf in Q1, which was the total for the whole of 2009.
• Performance of new office developments provides much comfort:
– Marina Bay Financial Centre (MBFC):
Towers 1 & 2 (totaling 1.6 mln sf) are fully leased, while Tower 3 (1.3 mln sf and to be anchored by DBS) is now 55% leased;
– Ocean Financial Centre (OFC): 850,000 sf of net lettable space and completion in mid 2011, is >30% committed.
PST – BT
PST to buy two bulk carriers for US$123m
Purchase amounts to 75% of market cap, but PST has sealed charter of vessels
PACIFIC Shipping Trust (PST) yesterday said that it will acquire two capesize bulk carriers from Mitsubishi Corporation for a total of US$123.2 million. It also entered into two agreements for the 10-year time charter of each of the new vessels to China-based steel firm Jiangsu Shagang Group Co.
The consideration for the two vessels amounts to 75 per cent of PST’s market capitalisation of US$165 million as at June 25 – when its trustee-manager PST Management (PSTM) signed the contract with Mitsubishi. However, PSTM said that the acquisition is in line with ‘the ordinary course of business of PST’ because the commitment to purchase the vessels was done concurrently with the commitment to charter them out, and would not result in any significant change in its risk profile.
PSTM will fund the acquisition through a combination of internal cash, and debt and equity financing. The bulk of payment for the ships – 85 per cent – will be payable upon their delivery in September next year, while 12 per cent of the purchase price of US$61.6 million for each ship will be payable within six days of the signing of the relevant sales contracts. The remaining three per cent will be payable by December this year.
The two vessels are expected to contribute about US$194 million in charter revenue over the 10-year time charter period to Jiangsu Shagang – touted as China’s largest private steel enterprise. The amount is based on the US$27,000 a day that each vessel will fetch while it is chartered out to the Chinese steel company.
PSTM said that its acquisition of the two 180,000 deadweight tonne (DWT) – a measure of how much weight a ship is carrying or can safely carry – ships marks its foray into the non-container vessel segment of the shipping business.
Said PST Management’s acting CEO Teo Choo Wee: ‘We believe that this is the right timing to enter into a dry bulk acquisition. PST has acquired the vessels at an attractive price that is substantially lower than the prices contracted in 2007 and 2008 for comparable ships.’
The two ships will increase PST’s fleet to 14 vessels. PST said that all of its ships will be leased out on long-term, fixed-rate charters.
‘With long-term leases stretching into 2021, PST will enjoy stable income of close to US$500 million over the next 10 years.’
In April, PST said that it saw a 19 per cent drop in first-quarter distribution per unit (DPU) to 0.793 US cent, from 0.980 US cent a year back.
The DPU is also a drop from 0.827 US cent in Q4 2009, as revenue from the trust’s 12 vessels stayed flat at US$15.2 million.
Income retained for working capital rose to US$10 million, from US$3.2 million in Q1 2009. As a result, income for distribution fell to US$4.7 million, from US$5.8 million previously.
Yesterday, PST’s shares closed unchanged at 28 US cents after it resumed trading in the afternoon following its announcement.
AIMSAMP – BT
AIMS AMP Capital Industrial Reit Management Limited said AIMS AMP Capital Industrial REIT has started legal proceedings in the High Court of Singapore against a tenant, CIT Cosmeceutical Pte Ltd, for, amongst other things, arrears in rental and repossession of the property.
The property in question is 2 Ang Mo Kio Street 65, Singapore 569058.
CCT – BT
CCT evaluating all options for StarHub Centre
Part of this process is a non-legally binding expression of interest exercise
THE manager of CapitaCommercial Trust (CCT) is evaluating all options relating to its asset plan for StarHub Centre, including the possibility of retaining the property as an office building, and has not made a decision yet.
‘As part of the evaluation process, we conducted a non-legally binding expression of interest exercise to ascertain interest for the sale of the property.
As there is no certainty of any deal materialising, unitholders are advised to exercise caution in trading the units of CCT,’ CCT said in a statutory filing to Singapore Exchange (SGX) yesterday.
Its announcement was in response to a BT article yesterday which, citing sources, said that the trust could be close to selling the 10-storey commercial building.
BT reported that StarHub Centre’s transaction price was expected to be above the Dec 31, 2009, valuation of $268 million.
In its statement yesterday, CCT said that its manager had in January 2010 announced that, as part of its portfolio reconstitution plan for the trust, it had obtained outline planning permission from Urban Redevelopment Authority (URA) to convert StarHub Centre from pure commercial use to up to 80 per cent residential and 20 per cent commercial use.
BT reported yesterday that the expression of interest exercise for StarHub Centre closed last month and that parties had been shortlisted to do due diligence.
The outline permission granted by URA for a mostly residential project is capped at the current 4.9 plot ratio that the existing property is already built up to.
Based on this and the 80 per cent residential limit, a redevelopment scheme can yield about 266,230 sq ft of residential space, sufficient for 212 apartments of an average size of 1,200 sq ft, the BT report estimated.
StarHub Centre received Temporary Occupation Permit in 1998 and stands on a site with 99-year leasehold tenure starting Feb 1, 1996.
On the stock market yesterday, CCT ended one cent lower at $1.17 amid an overall weaker market.