Month: July 2007
CRCT – BT
Q2 distributable income of CRCT beats forecasts
At $8.1m, it is 9.6% more than forecast; net property income lower than expected
CAPITARETAIL China Trust (CRCT) yesterday reported a distributable income of $8.1 million for the second quarter ended June30, 2007 – 9.6 per cent higher than the forecast $7.4 million. Distribution per unit (DPU) came to 1.70 cents, which was also 9.6 per cent higher than the forecast DPU of 1.55 cents. There is no data for the corresponding three months last year as CRCT was listed in December 2006.
The trust has a portfolio of seven retail malls in China valued at about $690 million.
CRCT’s distributable income beat forecasts despite a lower-than-expected net property income and revenue. Net property income for the second quarter came in at $12.4 million, 1.6 per cent lower than the forecast of $12.6 million. Similarly, gross revenue was $17.9 million, 7.2 per cent less than the forecast $19.2 million.
CRCT attributed the lower-than-expected turnover to a temporary vacancy void due to reconfiguration works at Xinwu Mall, as well as the longer-than-expected time taken to conclude lease negotiations with F&B tenants at Qibao Mall.
Revenue at Wangjing Mall was also lower due to some tenants taking longer than anticipated to receive their approvals from the authorities as well as pre-terminations by some tenants, CRCT said. The situation at Wangjing Mall has already been resolved, said Lim Beng Chee, chief executive of CapitaRetail China Trust Management Limited (CRCTML), CRCT’s manager. Xinwu Mall will be at peak performance soon. For Qibao Mall, performance will be normal by year-end, Mr Lim said.
The trust will continue to look for opportunities to grow its portfolio size in 2007, and remains confident of delivering the forecast distribution of 6.13 cents per unit for the year – barring any unforeseen circumstances.
‘CRCT is on track to undertake, in the next few months, its first yield accretive acquisition worth over $250 million, which will grow its asset size to close to $1 billion,’ said Hsuan Owyang, chairman of CRCTML.
The new acquisitions are likely to come from its parent company CapitaLand’s properties in China, Mr Lim added.
CRCT’s shares gained one cent to close at $2.75 yesterday.
a-iTrust : UOBKH
Singapore’s First Listed Indian Property Trust
a-iTrust, Singapore’s First Listed Indian Property Trust has launched its IPO on 25th July 2007 with an initial yield of 4.75%. The initial portfolio comprises of four industrial assets in India, with a total portfolio size of S$932.5m.
Strategic assets with quality tenants. A-iTrust’s four world class IT parks, namely International Tech Park Bangalore (ITPB), International Tech Park Chennai (ITPC), CyberPearl (Hyderabad) and The V (Hyderabad) comprise of 13 predominantly multi-tenanted buildings. The properties occupy a total Super Built-up area (SBA) of 4.25m sf and have an overall portfolio occupancy of 95%. The properties are supported by a host of ancillary facilities and facilities with a significant portion of their tenants comprising of leading MNCs.
Characteristics of a REIT, but not one. a-iTrust is a business trust and not a REIT, but will however take after characteristics of a REIT. Management has committed to distribute 100% (min 90% for REIT) of distributable income from listing date to FY09, and at least 90% thereafter, as well as voluntarily limit its gearing to 35% of deposited property or 60% if credit rating is obtained (similar to a REIT). As a business trust, it can however take on a maximum of 20% property development activities of the trust property, unlike a REIT, whose development activities are capped at 10%.
Unique growth model. The trust adopts a unique growth model comprising of organic growth, an in-built development pipeline on existing land within its property portfolio, and the Trustee-Manager’s three-pronged external acquisition strategy. Its acquisition strategy includes: 1) Right of First Refusal (ROFR) of properties in India from Ascendas India Development Trust (AIDT); 2) ROFR of properties in India from Sponsor; and 3) third-party acquisitions.
On its in-built development pipeline, the completion of the second building in ITPC, the Crest (due completion in Aug 07), as well as the completion of the fifth building in The V (due completion in Sep 07), will see an addition of 0.73m sf and 0.38m sf of SBA respectively. Over the next three years, we will also see an increase in SBA by 5.3m sf through the development of several other buildings.
AscottREIT – UOBKH
2Q07: Results Boosted By Contributions From New Acquisitions
Strong topline growth from contributions of new acquisitions. Ascott Residence Trust’s (ART) reported strong revenue growth of 55% qoq at S$40.6m, on the back of contributions from six additional properties acquired in 2Q06. The strong revenue growth filters down to an impressive 58% qoq increase in distributable income of S$12.1m, implying a DPU of 2.01Scts (18% qoq increase). Amongst the markets, Vietnam and Singapore achieved the strongest performance, with double-digit growth in revenue and gross profit.
Strength in making strategic acquisitions. ART is the world’s only pan Asian serviced residence REIT. It was listed with an initial portfolio of 12 strategically located assets of about S$856m in total asset size in seven pan-Asian cities (Singapore, Australia, China, Indonesia, Japan, Philippines and Vietnam), and had grown to the current S$1.2b portfolio size, comprising of 18 properties. Going forward, we believe that ART will continue to make strategic acquisitions and benefit from the benign hospitality segment globally.
FrasersCT – OCBC
3Q beats forecasts
3Q was better than expected. Frasers Centrepoint Trust’s (FCT) delivered 3Q07 revenue of S$18.9m, up 4.0% YoY, with distributable income of S$10.3m and DPU of 1.67 cents. Distributable income was higher than FCT’s own forecast by about S$1.2m and this was attributed to higher Other Revenue and Income support from its sponsors due to the renovation works at Anchorpoint. The results beat our estimates by about 5%.
Completed acquisition of H-REIT. In the last quarter, FCT announced the completion of the acquisition of a 27% stake in Hektar REIT (H-REIT), a Malaysian retail REIT for S$46.6m as well as a 40% stake in the manager, Hektar Asset Management Sdn Bhd. FCT will fully fund these investments by debt. Even though the current investment into H-REIT is small (H-REIT’s two assets are worth RM523m), and the accretion to DPU is minimal at 0.21 cents, we nevertheless view these investments positively. This is because H-REIT has good growth potential. It has a pipeline of acquisitions that could potentially grow its NLA by 2.3x over the next 3 years. More importantly, these investments provide FCT with an additional avenue of
growth as well as a platform for it to get into the retail market scene in Malaysia.
Asset enhancement on Anchorpoint to complete in 1Q08. FCT is presently revamping Anchorpoint Shopping Centre (ASC). It is repositioning ASC as a village mall concept, offering a wider range of F&B outlets. The project is slated for completion in Nov 2007 and thus will only impact earnings from 1Q08. In terms of lease commitments, FCT has already or is near to securing about 80% occupancy and we do not see an issue in getting 100% commitments by November with the current boom in the retail market space. Beyond ASC, asset enhancement works (AEW) are likely to be carried out at Northpoint and Causeway Point. These projects
are likely to have greater impact on FCT’s earnings due to their significantly larger spaces. However, we do not expect the completion of AEW at Causeway Point until 2008.
Maintain HOLD. While we are positive on FCT’s new growth initiative coming from H-REIT, presently there is not much clarity on the DPU accretion from this acquisition. Hence, we have not factored in this in our valuation. We would prefer to wait for more news before revising our rating and fair value of S$1.67. We thus maintain our HOLD rating for now.
FirstREIT – BT
First Reit goes on acquisition trail
It aims to boost its asset portfolio to $500m by 2009
FOLLOWING the recent announcement by First Real Estate Investment Trust that its distributable income of $4.5 million for the second quarter exceeded forecasts by 3.8 per cent, the Reit is embarking on an acquisition trail to raise asset portfolio to $500 million by 2009.
Singapore’s first healthcare real estate investment trust recently completed its acquisition of Adam Road Hospital for $14.9 million.
With its first hospital acquisition in Singapore, earnings from hospitals will contribute further to First Reit’s revenues.
In the second quarter ended June 30, First Reit reported that net property income rose 8.6 per cent to $6.5 million on the back of maiden contributions from its three recently acquired nursing homes in Singapore.
‘We believe that our yield of 8.19 per cent continues to be one of the highest among Singapore Reits. With a clear focus in Asia’s booming healthcare sector, First Reit offers investors a unique and growing asset class which holds immense potential for yield and capital growth,’ said Bowsprit Capital Corporation chief executive Ronnie Tan, who manages the Reit.
Since its listing in December, First Reit has expanded its asset base by about 20 per cent and now holds eight healthcare assets totalling $308 million. It has four assets in Indonesia, three of which are hospitals. In Singapore it has three nursing homes and a hospital.
Dr Tan said: ‘We will continue to be fairly aggressive in looking for assets, not only in Indonesia and Singapore but we are very keen to look at Chinese assets. In the near term, China will present us with very good opportunities and we hope that in three to six months we will be able to firm up positions in China.’
In Singapore, First Reit will continue to look for further nursing homes. Dr Tan said they provide a stable business in the long term, due to Singapore’s ageing population.
The Singapore Reit is also exploring potential acquisitions with its Indonesian sponsor Lippo Karawaci. Possible projects include Siloam Hospitals Lippo Cikarang and Siloam Hospital Semanggi, which will house Indonesia’s first private cancer treatment centre.
To finance its acquisitions, First Reit has a $90 million term loan facility with OCBC. Including the latest acquisition of Adam Road Hospital, First Reit’s gearing stands at 16.5 per cent.
First Reit’s distribution per unit for the second quarter was 1.65 cents – 3.8 per cent above forecast. The Reit’s shares closed at 82 cents yesterday, up 1.2 per cent.