Month: July 2011
FCOT – BT
FCOT posts DPU of 1.38 cents for Q3
FRASERS Commercial Trust (FCOT), whose five-into-one unit consolidation was completed in February this year, yesterday posted a distribution per unit (DPU) of 1.38 cents for the third quarter ended June 30.
This is 10 per cent higher than a year ago, when the DPU, after adjustment for the unit consolidation effect for comparison, was 1.25 cents.
Distribution per Series A convertible perpetual preferred unit (CPPU) was 1.37 cents, unchanged year on year.
FCOT’s Q3 results were driven largely by higher contributions from a local property, KeyPoint, and two Australian properties, Central Park and Caroline Chisholm Centre.
The strengthening of the Australian dollar against the Singapore dollar played a part in boosting contributions from the Australian properties. Together with rising occupancies and higher rental rates, net property income in Q3 rose 10 per cent over the year to $24.9 million.
Total distributable income rose 8 per cent to $13.4 million from a year ago. This comprised $8.7 million in distribution to unitholders – which increased 13 per cent – and $4.7 million in distribution to CPPU holders – which stayed flat.
For the nine months ended June 30, DPU was 4.23 cents, up 4 per cent year on year from 4.05 cents (which was adjusted for the consolidation effect). Distribution per CPPU was unchanged at 4.11 cents.
In January, FCOT sold Cosmo Plaza, an office building in Japan.
Later in May, it divested its investment in the Australian Wholesale Property Fund, using the net proceeds to repay part of an existing Australian dollar loan, creating interest savings.
‘The full effect of the partial repayment of the AUD loan would be seen in the coming quarters,’ said Low Chee Wah, CEO of FCOT’s manager. He added that the disposal of non-core assets has helped to strengthen FCOT’s balance sheet and distributable income. ‘The trust is benefiting from the fruits of the initiative which will place FCOT in a better position for future growth,’ he added.
FCOT closed unchanged on the stock market yesterday at 87 cents.
FCT – BT
FCT buying Bedok Point for $127m
FRASERS Centrepoint Trust (FCT) is buying Bedok Point for $127 million from its sponsor, Frasers Centrepoint Limited – the property arm of Fraser and Neave (F&N) – using a mixture of debt and equity.
The market has been expecting the acquisition, so the spotlight is now on the number of new units FCT could issue and the potential issue price.
FCT said yesterday that it is likely to conduct a private placement, but it gave no other details on the exercise. It will inform unitholders of the details of the financing structure ‘in due course’.
Bedok Point is a four-storey mall at Bedok town centre, with a net lettable area of 80,985 square feet. It commenced operations in December 2010 and was 97.4 per cent occupied as at June 30. It will be the fifth mall in FCT’s Singapore portfolio and will boost the retail real estate investment trust’s (Reit) asset size to $1.66 billion from $1.53 billion.
The price of $127 million is the average of two valuations – $128 million and $126 million – by independent valuers.
‘Our unitholders can expect to enjoy higher distribution per unit from this yield-accretive acquisition,’ said CEO of FCT’s manager Chew Tuan Chiong in a press release.
FCT is in the process of determining an optimal debt and equity-financing plan for the purchase, said Dr Chew at a separate briefing. Through the issuance of new units, the Reit can also increase its free float, he added. As at July 28, F&N held a 43.2 per cent interest in FCT and is its single largest unitholder.
Dr Chew was unable to comment on the amount of discount the new units could be priced with, but he pointed to FCT’s earlier private placement for the purchase of YewTee Point and Northpoint 2. When the exercise took place amid a ‘very volatile’ market in early 2010, the new units were priced at a 3.7 per cent discount to FCT’s adjusted volume-weighted average unit price.
Moody’s Investors Service said that the acquisition has no immediate impact on its Baa1 corporate family rating on FCT, and the rating outlook is stable.
DMG & Partners Research raised its target price for FCT to $1.79 from $1.77 and maintained its ‘buy’ call on the counter.
FCT gained half a cent on the stock market yesterday to close at $1.54. Meanwhile, F&N rose five cents to close at $6.
The conglomerate will be re-investing net proceeds from the sale of Bedok Point.
a-iTrust – BT
Ascendas India Trust Q1 DPU down 10%
ASCENDAS India Trust (a-iTrust) yesterday posted a 10 per cent year-on-year decline in distribution per unit (DPU) from 1.66 cents to 1.50 cents for the fiscal first quarter ended June 30 – an annualised yield of about 6.4 per cent, based on yesterday’s closing unit price of 96 cents.
The decrease was attributable to the effect of a stronger Sing dollar and additional financing costs for newly completed buildings. Three buildings were recently completed and the construction financing costs were recognised in the income statement upon completion.
Although income contribution from new buildings and higher recovery of utilities cost pushed total property income up one per cent year-on-year (from $30.89 million to $31.22 million), total property expenses increased 14 per cent year-on-year from $11.95 million to $13.66 million, due to an increase in a-iTrust’s portfolio as well as higher electricity tariff and cost of fuel.
Consequently, net property income was down 7 per cent from $18.94 million in the same period the previous year to $17.56 million. But in Indian rupee terms, net property income was 2 per cent higher. The trust expects additional property expenses to be progressively compensated by higher property income in the immediate future.
Gearing at the end of the first quarter was 22 per cent. This level gives a-iTrust the flexibility to fund growth via development or acquisition using debt or equity.
a-iTrust’s portfolio of 6.4 million square feet – including Zenith, Park Square & Voyager – of completed space is fairly evenly distributed among Bangalore, Chennai and Hyderabad. Occupancy for its portfolio – excluding Zenith, Park Square & Voyager – as at June 30 was 96 per cent.
Tenant demand at its latest three developments was also strong. As at July 27, the tenancy commitment rates for Park Square, Voyager and Zenith were 76 per cent, 68 per cent and 74 per cent respectively. ‘In light of the reassuring demand for our new space, we are already in the midst of planning the development of another multi-tenanted IT SEZ building of approximately 540,000 sq ft in Bangalore’s International Tech Park,’ said Ascendas Property Fund Trustee Pte Ltd CEO Jonathan Yap.
MCT – CIMB
Upside from VivoCity yet to kick in
• In line; maintain Outperform. 1Q12 DPU meets expectations at 19% of our full year estimate and consensus. The quarter only consisted of 65 days, after listing. Annualised, DPU would have formed 26% of our FY12 forecast. There was strong rental growth at VivoCity even though the bulk of potential lease-renewal upside (43% of leases) has yet to kick in. This remains a key catalyst for MCT in FY12, we believe, with the completion of AEI in PSAB and the possible acquisition of MBC forming the next triggers. We refine our model to assume slightly stronger growth for VivoCity (raising FY12-13 earnings by 3-4%) but lower our DDM-based target price from S$1.08 to S$1.01 on applying a lower terminal growth rate of 2% (2.5% previously), in line with our assumptions for its listed peers. MCT trades at a 5.9% CY12 yield.
• Potential upside from VivoCity yet to kick in. 1Q12 revenue inched up 3% yoy to S$33m as VivoCity’s base and turnover rents grew 4.5% and 6.7% yoy respectively. Although 43% of its total leases are due for renewal this year, we understand that the new base rates are likely to kick in only at end 2011/early 2012. The asset remains substantially under-rented, in our view, at S$9.79psf as at Nov 10 vs. an average of S$11-14psf for comparable malls in Singapore. We understand that GTO growth at VivoCity could have been 10-15% yoy, lending support to revenue growth for MCT (GTO rents form 20% of VivoCity’s gross revenue). We anticipate substantial rental reversions in FY12 as the mall enters its first renewal cycle.
• PSAB enhancement and MLHF step-up to add to NPI; acquisition trigger from MBC. Strong rental growth in the quarter was partially offset by the decanting of retail units for the development of the new Alexandra Retail Centre (ARC), due to be completed by end-2011. Retail space is estimated at 89.6k sf of NLA while office space consists of 15.1k sf of NLA. By Dec 11, the rental step-up provision for MLHF’s master lease (10-12%) will also be triggered to fuel further organic growth. In the mid-term, acquisition upside could continue to come from its sponsor’s assets under ROFR, namely Mapletree Business City.
CLT – DBSV
Upside from Acquisitions
At a Glance
• In line with expectation and on track to meet our full year forecasts
• Acquisitions and asset enhancement activities to drive earnings growth.
• Maintain Buy, S$1.11
DPU of 2.1ct is inline with expectation. Cache Logistics Trust (“Cache”) reported S$15.5m net property income (“NPI”), 6.1% above IPO forecasts. 2Q sequential performance was relatively robust with gross revenue and NPI rising 9.2% and 7.2% to S$16.2m and S$15.5m respectively, lifting distributable income to about S$13.2m (+7.1% qoq). The robust performance was largely due to an enlarged portfolio and the group’s continuous asset enhancement efforts. As a result, DPU rose by about 6.8% qoq to 2.09cts. The first 2 quarters’ DPU forms 50% of FY11 forecast.
New acquisitions yet to kick in, more to come. Recent acquisition of Jinshan Chemical warehouse in Shanghai and Air market Logistic Centre in Singapore, as well as the 70,000 sf asset enhancement works at Cold Hub should underpin earnings growth in the coming quarters. Gearing remained healthy at 29.1% and the group is looking to grow portfolio further via acquisitions in Singapore and China. All-in Interest rate has also lowered from 4.37% to 3.92% due to the more attractive rates secured for its recent acquisitions.
Recommendation
BUY Call, TP maintained at S$1.11. Cache remains attractive for its FY11-12F yield 8.2-8.7%, which is 230-270 bps above the peers’ average 5.9% – 6.2%. Re-rating catalysts will be the execution of more acquisitions that the manager is currently reviewing.