Month: July 2007
CDL H-Trust – SGX
ANNOUNCEMENT THE ISSUE OF 120,162,795 NEW STAPLED SECURITIES (THE “NEW STAPLED SECURITIES”) AND USE OF PROCEEDS OF THE EQUITY FUND RAISING
Issue of 120,162,795 New Stapled Securities
These New Stapled Securities will commence trading on the Main Board of Singapore Exchange Securities Trading Limited (the “SGX-ST”) at 9.00 a.m. today.
Results of the Private Placement
Results of Preferential Offering
The H-REIT Manager and the HBT Trustee-Manager are pleased to announce that as at the close of the Preferential Offering on 13 July 2007, valid acceptances for 100,635,729 New Stapled Securities were received under the Preferential Offering. The Joint Lead Managers and Underwriters, DBS Bank Ltd and Citigroup Global Markets Singapore Pte. Ltd., have procured subscriptions and/or subscribed for the remaining 6,527,066 New Stapled Securities under the Preferential Offering pursuant to the placement agreement dated 6 July 2007.
Rule 812(1) of the Listing Manual
Except for subscriptions under the Preferential Offering by Restricted Placees under the Waiver, none of the Restricted Placees subscribed for any New Stapled Securities under the Private Placement.
Status of the New Stapled Securities
For the avoidance of doubt, the New Stapled Securities will not be entitled to participate in the distributions of any distributable income accrued by H-REIT prior to the date of issue of such New Stapled Securities.
Out of the net proceeds of approximately S$291.0 million from the Equity Fund Raising, S$177.4 million will be used to repay part of tranche B of the DBS Bank Bridging Loan Facility (as defined in the Circular) with DBS Bank Ltd which was used to fund the acquisition of Singapore Hotel Investment Holdings Company for the purpose of the acquisition of Novotel Clarke Quay. The H-REIT Manager and the HBT Trustee-Manager will make further announcements upon the utilization of the remaining net proceeds of approximately S$113.6 million from the Equity Fund Raising.
KREIT – UOBKH
No Surprises
1H07 net profit up 55.8% yoy, distributable income up 36.8%. K-REIT achieved a good set of results, with its Q2 property income increased 11.1% qoq to S$8.9m. Net profit increased 20.6% qoq to S$4.2m, resulting in a 55.8% yoy increase for the total 1H07 net profit of S$7.6m. The increase in rental income is mainly attributed to improved occupancies, and higher rental rates achieved for new and renewed leases. Property income saw the highest increase for Keppel Towers and GE Tower, of about an addition of S$0.88m over that of 1Q07 (S$3.68m). DPU rose 20.9% from 1.77 Scts in 1Q07 to 2.14 Scts (7.88 Scts on an annualized basis), reflecting a yoy increase of distributable income to S$9.5m in 1H07. Property expenses increased marginally due to higher property tax (consequent to improved occupancies), higher repair and maintenance costs as well as higher management fees.
Rental reversions and rising rental rates still key growth driver. K-REIT is well-positioned to capitalise on the rentals uptrend as it will see almost 70% (by NLA) of its office leases expire and due for renewal between now to end 2010. Blended portfolio occupancy has reached a high of 99.6%, limiting any upside through improvements in occupancy levels. Although management is currently reviewing any possible asset enhancement opportunities, we are cautious on the potential impact.
Earnings surprises from acquisitions. Any earnings surprises will come from acquisitions to hit K-REIT’s target portfolio of S$2.0b over the next few years, although it has not made any maiden acquisitions so far. Key risk, however, is the increasing difficulty in making yield accretive acquisitions, especially in the office segment where capital values and soaring. Having said that, we do not rule out the possibility of Keppel Land injecting its office assets into K-REIT.
Maintain BUY, target price S$3.39. We maintain BUY on K-REIT with a target price of S$3.39.The stock is currently trading at a yield of about 2.86%. In deriving our target price, we adopted DCF valuation using a WACC of 6.04% derived from a market risk premium of 6.5% and beta of 0.7, and a terminal growth rate of 2.0%. We also factored in conservative acquisitions of S$100-150m p.a. over the next few years.
Allco – SGX
Where capitalised terms are used in this announcement and not otherwise defined, such capitalised terms shall bear the same meanings as ascribed to them in the announcements made by Allco Commercial Real Estate Investment Trust (“Allco REIT”) on 25 May 2007 and 26 June 2007 and the Circular dated 26 June 2007.
1. RESULTS OF THE RIGHTS ISSUE
1.1 Level of Subscription
Details of the valid acceptances and excess applications for Rights Units received are as follows:
(i) valid acceptances were received for a total of 193,536,712 Rights Units, representing approximately 97.4% of the total number of Rights Units available under the Rights Issue; and
(ii) excess applications were received for a total of 40,442,155 Rights Units, representing approximately 20.3% of the total number of Rights Units available under the Rights Issue (“Excess Rights Units Applications”).
Allco Singapore Investments Pte. Ltd. (“ASI”), a Substantial Unitholder, accepted its Rights Entitlement of 29,400,000 Rights Units. ASI did not apply for any Excess Rights Units.
Based on the total number of Units in issue as at the Books Closure Date, 198,749,242 Rights Units will be issued pursuant to the Rights Issue.
1.2 Allocation of Rights Units for Excess Rights Units Applications
The Rights Units represented by the provisional allotments of:
(i) Eligible Unitholders who did not renounce or trade their Rights Entitlements and
did not accept all or part of their Rights Entitlements;
(ii) Ineligible Unitholders; and/or
(iii) Purchasers who did not, for any reason, accept the Rights Entitlements, and disregarded fractions of Rights Units, amounting in aggregate to 5,212,530 Rights Units, will be used to satisfy Excess Rights Units Applications or otherwise dealt with in such manner as the Directors may, in their absolute discretion, deem fit in the interests of Allco REIT, provided that in the allotment of Excess Rights Units, preference will be given to the rounding of odd lots, and Substantial Unitholders and Directors will rank last in priority.
2. ALLOTMENT OF RIGHTS UNITS
CDP will send notification letters, on or about 23 July 2007, to Eligible Unitholders with valid acceptances and successful applications for Excess Rights Units by ordinary post, at their own risk, to their mailing addresses in Singapore as maintained with CDP, stating the number of Rights Units that have been credited to their Securities Accounts.
In relation to any void acceptances of Rights Units or any unsuccessful applications for Excess Rights Units, all monies received in connection therewith will be returned by CDP on behalf of Allco REIT to the Eligible Unitholders, their renouncees or the Purchasers, as the case may be, without interest or any share of revenue or other benefit arising therefrom, within fourteen (14) days after the Closing Date, by crediting their accounts with the relevant Participating Banks (where acceptance is through Electronic Application) or by ordinary post (where acceptance and/or application is through CDP) and at the Eligible Unitholders’ or their renouncees’ or the Purchasers’ own risk.
3. CLOSING AND LISTING
3.1 Closing
The Manager expects that 198,749,242 Rights Units will be issued pursuant to the Rights Issue on or about 20 July 2007.
3.2 Listing and Quotation
The Manager further expects that the Rights Units will be listed and quoted on the Official List of the SGX-ST with effect from 9.00 a.m. on or about 23 July 2007.
The Manager wishes to take this opportunity to thank Unitholders for their support in ensuring the successful completion of the Rights Issue.
ALLCO – DBS
– Point Allco has strong office income flows from China Square Central and Central Park (Perth), on account of rising office rentals in Singapore and the resource industry boom in Perth. After its first acquisition of 55 Market Street, Allco has recently acquired a 50% stake in Centrelink Property in Canberra which brings Allco back to a 5050 asset exposure in both Singapore and Australian markets.
– Relevance Following the rights issue by Allco to fund the Centrelink property acquisition and 55 Market Street, we maintain our Buy recommendation and accordingly adjust our DCF derived target price to S$ 1.39.
– Second acquisition – The Centrelink Property in Canberra. Allco has just acquired a 50% stake in Centrelink Property, for a consideration of A$108.75m with projected FY08 property yield of 7.4%. This was announced together with the proposed renounceable rights issue to fund the acquisition. The asset is a new “Grade A” office complex with NLA of 430,556 sf, strategically located within the core of the Tuggeranong Town Centre in Canberra. This asset would tie in a long lease of 18 years to anchor tenant, the Centrelink National Support Office (state agency of the Australian Federal Government), with organic growth of 3% per annum incorporated into the acquisition by annual stepped rent provisions.
– Rights issue raises debt capacity for acquisitions. With the acquisition, the portfolio now crosses the billion $ mark to S$1,016.6m. With the rights issue tied back-to-back to the Centrelink Property acquisition, gearing is now reduced from 33% to 23% which unlocks more gearing headroom for acquisitions. Assuming the maximum gearing cap of 60% in line with Singapore Property Fund Guidelines, this would provide debt capacity of approximately another S$1bn for acquisitions to be fully funded by debt.
– Ex-rights price target of S$ 1.39. Previously, we had factored in the 55 Market Street acquisition prior to the rights issue funded by debt, which is accretive and higher than the initial estimated 5% cap rate upon acquisition. Together with the Centrelink acquisition, Allco would par down debt associated with the 55 Market Street acquisition by a renounceable rights issue which raises proceeds of about S$210m. Following Allco going ex-rights, we maintain our Buy recommendation and accordingly adjust our DCF derived target price to S$ 1.39.