Month: February 2011
CMT – BT
Capitamall Trust buys Iluma for S$295 mln
SINGAPORE – Singapore's CapitaMall Trust Management said on Monday it has entered an agreement to buy a shopping mall in the city-state, Iluma, for S$295 million ($231 million).
'Iluma is a new shopping mall in Singapore located at Victoria Street opposite the popular Bugis Junction, one of CMT's existing properties. The mall has a net lettable area of 185,190 square feet,' CapitaMall Trust said in a statement.
CapitaMall is part of Singapore's CapitaLand, Southeast Asia's largest property firm.
CMT – BT
CMT’s first retail bonds 1.9 times subscribed
CAPITAMALL Trust (CMT) announced yesterday that its two-year retail bonds were 1.9 times subscribed. In particular, the bonds under the public offer were four times subscribed, receiving valid applications of $206.47 million when the offer closed at noon on Feb 23.
In response, CMT increased the bond offer from $200 million to $300 million. An amount of $175 million has been allocated to retail investors, while $125 million has been allocated to the placement tranche, it added.
CMT had initially allocated $50 million of the bond offer to retail investors and $150 to the placement tranche.
The issue price of the 2 per cent bonds, due 2013, will be $1 per $1 in principal amount, ie 100 per cent of the principal amount of the bonds.
‘We are very encouraged by the strong response to our first retail bond offer,’ said Simon Ho, chief executive of CapitaMall Trust Management, which manages CMT.
Expressing regret that they were unable to fully satisfy all the demand in its inaugural offer, he added: ‘Investors can look forward to opportunities to participate in our future offers under the $2.5 billion retail bond programme that we have set up.’
The bonds – which have received a final credit rating of A3 from Moody’s – will begin trading on the Singapore Exchange at 9am on Feb 28 in board lot sizes of $1,000.
The bond issue is not expected to have a material effect on the net asset value and earnings per unit of the CMT group for the current financial year, it said.
CMT units closed trading one cent higher at $1.78 yesterday.
PCRT – BT
Perennial trust units at $1 each
Business trust expected to raise $1.1b in gross proceeds
PERENNIAl Real Estate, led by former CapitaLand Retail chief Pua Seck Guan, has set an indicative price of $1 per unit for the listing of its business trust that is estimated to raise $1.1 billion in gross proceeds.
It is offering 1.09 billion units comprising an international placement of 610.2 million units, a public tranche of 50 million units, and cornerstone units of 432 million units for Perennial China Retail Trust (PCRT).
The cornerstone investors, which will snap up about 40 per cent of the offering, are Nan Fung Group, AEW Capital Management, AIA, CBRE, Henderson Global Investors, Lion Global, and Prudential.
According to a term sheet seen by BT, the IPO price represents a 22 per cent discount to analysts' consensus net asset value (NAV) per unit of $1.29, based on three banks' pre-deal research reports.
Perennial is wholly owned by Pua Seck Guan, the former CEO of the manager of CapitaMall Trust, Singapore's first real estate investment trust (Reit).
With a projected market cap of $1.11 billion at listing, PCRT will have an initial portfolio size of $1.1 billion covering four properties in China. The IPO proceeds will be mainly used to finance the acquisition of these properties.
One is a 50 per cent stake in retail mall Shenyang Red Star Macalline Furniture Mall and the other is a 50 per cent stake in Shenyang Longemont, a retail cum office development.
Perennial also has the contractual rights to acquire a 100 per cent stake in two other retail malls – Foshan Yicui Shijia Shopping Mall and Chengdu Qingyang Guanghua Shopping Mall.
The business trust is projected to have a distribution yield of 3.02 per cent for fiscal 2011 and 3.08 per cent for fiscal 2012, according to the prospectus lodged with the Monetary Authority of Singapore.
Perennial said in a term sheet to potential investors that PCRT offers attractive total returns (yield plus NAV growth) and hence 'it should not be compared with the pure yield-play vehicles'.
It explained that the estimated yields are lower than comparable Reits' or business trusts', primarily because Red Star Macalline Furniture Mall is the only completed and leased-out property at IPO, while the rest are in pre-leasing stage or under development and due for completion between 2012 to 2014.
'The property yields of the underlying properties are expected to increase to approximately 6.5 per cent as rents stabilise,' it said. 'Accordingly, the DPU yield is expected to potentially increase. Valuer CBRE expects NPI (net property income) yield on purchase price at full maturity to be at approximately 7.8 per cent.'
While a business trust typically has no restrictions on distribution payout or leverage, Perennial has pledged, in the prospectus, to distribute at least 90 per cent of PCRT's distributable income to unitholders and pegged its leverage limit at up to 60 per cent of the value of PCRT's properties as set out in the trust deed.
Separate from the offering, the sponsor will subscribe to 10 million units in PCRT and has agreed to a lock-up period of six months for all the units and a 12-month lock-up for 50 per cent of those units.
DBS is the sole financial adviser for the IPO. It and Goldman Sachs and Standard Chartered are the joint global coordinators, bookrunners, issue managers and underwriters for the IPO.
Bookbuilding for the IPO has begun. The roadshow started on Thursday and will end on March 4. The public offer is expected to open on March 8 and close on March 14 and trading of the business units is expected to begin on March 16.
a-iTrust – DBSV
Growing presence in Hyderabad
• Proposed acquisition of portfolio of 5 buildings in Hyderabad
• Positives seen in deal; earnings accretion
• BUY Call maintained, TP adjusted to S$1.13 based on DDM
Deepens Hyderabad exposure. a-itrust proposes purchasing a portfolio of up to 5 buildings (2.2m sqft, +34% portfolio SBA) in Hyderabad, India for a total consideration of INR 8.5bn. The properties are located in an established IT Park – Hitec City 2 Special Economic Zone (“HTC2 SEZ”). The portfolio consists of two operating buildings, immediately acquired for INR 1.7bn (S$50.4m), while the remaining three are to be acquired progressively when they complete over 2012-2014. Through the vendor, a-itrust also has a right of first refusal to acquire up to another 1.16m sqft of SBA ( 4 buildings) in the future.
Positives on this deal. We are positive on this acquisition, aitrust will boost its portfolio in Hyderabad, enabling them to enjoy economies of scale, while the impact on distributions should be immediately accretive as operating buildings are currently trading at 100% occupancy, with established MNCs as tenants. We estimate initial yield to be c10% for the two operating buildings, comparing favorably against its implied yield of 8.5%. An attractive pipeline awaits a-itrust (3 pipeline acquisitions, 4 in a ROFR) , underpinning expected steady portfolio growth in the mid-longer term. We raise our earnings by c1-3% over FY12-13F, assuming a-itrust fund the acquisitions of three buildings (completed and under construction) via debt.
Growth visibility strengthens, BUY, TP S$1.13. We continue to like a-itrust for its growth trajectory. The trust offers an attractive DPU CAGR of 13% over FY11-13, underpinned by a growing portfolio. Currently offers a prospective yield of 7.3-9.3%. Maintain BUY.
FirstREIT – BT
Fortis acquires First Reit property for $33m
SOME seven months after bowing out of the take-over battle for Parkway Holdings, Indian billionaires Malvinder and Shivinder Singh are re-entering Singapore’s healthcare scene with the $33 million acquisition of an upcoming cancer hospital from First Real Estate Investment Trust (First Reit).
The purchase – to be funded by internal resources and completed by March – is being made via Fortis Global Healthcare, which is owned by the Singh family.
The hospital under development at No 19 Adam Road is a proposed three-storey Cancer Centre. The sale will provide First REIT with a net cash gain of about $8.3 million (after subtracting divestment fees, related costs and repayment of loans).
‘The sale proceeds will provide First Reit with greater financial flexibility to pursue other possible attractive acquisition opportunities and/or to repay debt,’ First Reit’s manager Bowsprit Capital Corporation said in an announcement to the Singapore Exchange. It will also reduce First Reit’s gearing from 17.6 per cent to 14.2 per cent.
At $33 million, the sale is 17 per cent above the property’s latest valuation of $28.2 million as at Dec 28 last year by CB Richard Ellis and 52.1 per cent higher than its cost of $21.7 million as at Dec 31 last year.
Speaking to BT yesterday, Fortis Global’s CEO Vishal Bali said that the company is creating verticals around different specialities in line with its vision to be an integrated healthcare provider.
According to Mr Bali, Fortis Global plans to tweak the existing design of the facility and the hospital is likely to come on-stream in the second or third quarter of next year.
‘We are also looking at future expansion in Singapore,’ Mr Bali went on to say, but declined to comment on whether Fortis Global is in talks with any other local companies at present.
This latest acquisition comes on the heels of two other purchases by Fortis Global in the last five months – that of Hong-Kong based primary healthcare service provider Quality HealthCare in November last year as well as the acquisition of a significant stake in Australia’s largest dentistry network, Dental Corporation, in January this year.
‘We will continue to look for opportunities to further expand our presence in the region,’ said Malvinder Singh, Fortis Global’s executive chairman, in an announcement yesterday.
The Singh family also owns a majority stake in India-based hospital operator Fortis Healthcare, which was embroiled in a corporate tussle last year with Malaysia’s sovereign wealth fund, Khazanah Nasional, over local healthcare provider Parkway. The Indian group eventually rescinded its offer after Khazanah trumped Fortis’ $3.2 billion general offer with a $3.5 billion general offer of its own.