Month: July 2007
CCT – UOBKH
2Q07: In Line With Expectations
Net profit up 54.0% yoy, distributable income up 84.7% yoy. CCT’s Q2 results came in line with expectations. Its net profit for 2Q07 was up 54.0% yoy to S$28.0m, while distributable income increased 84.7% yoy to S$29.3m, implying a DPU of 2.12 Scts (8.50 Scts on an annualised basis). Total return for the quarter swelled 3,137.4% qoq to S$758.5m, boosted by a net surplus of S$730.2m on revaluation of properties. For the first half results, net profit increased 40.8% yoy to S$51.4m while DPU increased 21.2% yoy to 4.23 Scts (8.53 Scts on an annualised basis).
Well-positioned to benefit in office, retail and hospitality segment. CCT is well-position in the office, retail and hospitality segment through its portfolio comprising of 74.5% by NLA of prime offices, and 60% stake in Raffles City which consists of office, retail and hotels (Swisshotel and Raffles De Plaza). The exposure allows CCT to benefit from the office rental upside through its substantial lease expiries in the next few years, improved retail yields from rigorous asset enhancement programs to Raffles City shopping area, as well as rising hotel rates.
Acquisition of Wilkie Edge. CCT has signed an agreement to purchase Wilkie Edge, a proposed 12-storey mixed development comprising office, retail and serviced apartments units for S$262.0m. Cap rates for the office and retail space are 4.5% and 5.75% respectively, while the serviced apartment units will follow the market cap rate. The development will have a GFA of 29,812 sqm and is targeted to complete in 4Q08. With the yield accretive acquisition of Wilkie Edge, CCT is on track to meet its target portfolio of S$5.0b-6.0b by FY09.
Re-iterate BUY, target price at S$3.72. We re-iterate a BUY on CCT with a target price of S$3.72, based on our DCF valuation which assumes a WACC of 5.97% derived from a market risk premium of 6.5% and beta of 0.7, and terminal growth rate of 2.0%. We also factored in acquisitions of S$500m-800m p.a. over the next few years. CCT is currently trading at a yield of 2.91%.
AREIT – BT
A-Reit’s distributable net income up in Q1
DPU of 3.37 cents, up 9.1%; net propery income climbs 15.8%
ASCENDAS Real Estate Investment Trust (A-Reit) has reported net income available for distribution of $44.7 million for its first quarter ended June 30, a 12.8 per cent year-on-year increase.It also said it will pay a distribution per unit (DPU) of 3.37 cents for the quarter on Aug 29, 9.1 per cent higher than for the previous corresponding quarter.
This also represents an annualised yield of 4.6 per cent based on the closing price of $2.94 per unit on June 29.
Reit manager Ascendas-MGM Funds Management’s CEO Tan Ser Ping said: ‘We are pleased to commence the new financial year with a sound first-quarter performance. On the back of the good economic performance and positive rental reversion from the existing portfolio, we achieved a commendable 15.8 per cent growth on our net property income compared to the prior corresponding period.’
Net property income for the quarter was $58 million.
New leases and expansion by existing tenants in A-Reit’s portfolio record a 57 per cent increase from a year ago resulting in an occupancy rate of 97.2 per cent, up from 96.1 per cent. Recent acquisitions include 1 Senoko Avenue for $11.2 million.
A-Reit is also undertaking the development of two projects: a partial build-to-suit business park property – HansaPoint @ CBP – at Changi Business Park and a partial build-to-suit distribution facility which is currently under development at Changi LogisPark.
An additional five-storey ramp-up warehouse is being added to Senkee Logistics Hub and it will be acquired for $63.8 million by A-Reit upon satisfaction of certain conditions.
A-Reit is also expected to acquire a logistic and distribution facility, currently being built by Goldin Enterprises Pte Ltd at Pioneer Walk for $22.5 million in the first half of 2008.
The Reit manager has renewed or leased a total of 82,763 sq m of space in the quarter. These leases represent an annualised rental income of $19.1 million. Total new leases for the period were 32,827 sq m, of which 44.4 per cent was in business and science parks, 13.7 per cent in hi-tech industrial properties and the remaining 41.9 per cent in two other asset classes – light industrial & flatted factories and logistics & distribution centres.
AREIT – UOBKH
1Q08: Good Start For The Financial Year
1Q08 NPI increase 15.8% yoy, DPU up 9.1% yoy. A-REIT’S net property income of S$58.0m and net profit S$42.7m reflects a 15.8% and 12.7% increase yoy respectively. The increase in rental income was a result of new leases and expansion by existing tenants which recorded a 57% yoy increase. DPU rose 9.1% from 3.09 Scts in 1Q07 to 3.37 Scts (6.79 Scts on an annualised basis). Overall occupancy was at 97.2% in 1Q08 compared to 96.1% 1Q07
Acquisitions continued to be focal point. Currently, A-REIT has a portfolio of 78 properties with a total book value of S$3.3b. In 1Q08, they acquired 1 Senoko Avenue. Currently, two development projects (HansaPoint @CBP and Zuellig Pharma) and two acquisitions of properties under construction (SENKEE Logistics Hub and Goldin) worth a total of S$148m are pending completion. Going forward, we believe acquisitions will continue to be the strategy for AREIT, although we note that the rate of acquisitions has slowed down in the last quarter.
Rental reversions and rising rental rates still key growth driver. A-REIT has successfully renewed or leased a total of 82,763 sqm of space in the last quarter. New demand for multi-tenanted buildings grew by 57% to 23,234 sqm compared to 14,754 sqm a year ago, out of which 21.5% and 19.3% were in the Business & Science Park Segment and the Hi-Tech segment respectively. We believe that A-REIT’s total 44.3% portfolio of high growth segments will continue to be a key beneficiary of the spillover from office demand for the next 2-3 years.
Re-iterate BUY, target price at S$3.13. We re-iterate BUY call on A-REIT with a target price of S$3.13, based on our DCF valuation which assumes a WACC of 5.62% derived from a market risk premium of 6.5% and beta of 0.75, and terminal growth rate of 1.5%. We also factored in acquisitions of S$400m-700m p.a. over the next few years.
AREIT – DBS
Riding on industrial growth
1QFY08 results. Gross revenue and net income available for distribution grew 14% and 13% y-o-y to S$77.3m and S$44.7m respectively. This improvement was mainly due to additional rental income from completed acquisitions. Distribution per unit grew 9% y-o-y to 3.37 cents.
Continued growth in industrial rent. According to CBRE, the average rent for all industrial space increased in the second quarter of 2007. Hi-Tech industrial properties led the growth, recognising an increase of 11.9% q-o-q. With rising office rents and supply of office space remaining tight, the demand for high-end quality business space is expected to be strong. Therefore, we remain optimistic on the outlook for High-Tech industrial space and Business and Science Parks, of which A-REIT has a total exposure of 45% (by portfolio value).
JTC’s plan revealed. JTC announced its plan to divest property worth between S$1.4bn and S$1.6bn. At least half of the industrial assets would be placed in a trust (expected to be set up in 2Q2008) that will be listed on the SGX. However, we note that the potential acquisition pipeline coming from its sponsor, Ascendas Land (Singapore) Pte Ltd (Ascendas), is still strong.
Maintain Buy with raised target price of S$3.16. Moving forward, in view of higher rental reversions, we have increased our DPU forecasts. DPU forecast for FY08 and FY09 increased by 4% and 9% respectively. Hence, this has raised our target price to S$3.16 based on DCF valuation, which incorporates an acquisition pipeline of S$400m p.a. till 2010. With a total return, including yield, of 11%, we are maintaining
our Buy recommendation.
KREIT – BT
K-Reit Asia’s Q2 net profit soars 70% to $4.16m
Distribution per unit for the quarter rises 20.9% to 2.14 cents
HELPED by higher rental income, K-Reit Asia’s net profit for the second quarter ended June 30 soared 70.4 per cent to $4.16 million from a proforma $2.44 million in the year-ago period.
This brought the first half’s net profit to $7.61 million, up 55.8 per cent from a proforma $4.88 million for H1 2006. K-Reit, a real estate investment trust for commercial properties, was listed in April last year.
For the first six months this year, K-Reit reported 36.8 per cent higher distributable income of $9.48 million. For Q2, the distribution per unit (DPU) rose 20.9 per cent to 2.14 cents from Q1’s 1.77 cents. The DPU for the first half is 3.91 cents, working out to an annualised 7.88 cents.
K-Reit’s portfolio includes Keppel Towers, GE Tower, Bugis Junction Towers and about 44 per cent of the strata area of Prudential Tower.
In a statement yesterday, the Reit’s manager, K-Reit Asia Management (KAM), said its portfolio’s committed occupancy climbed to 99.6 per cent. It also said that average gross rental rates reached $4.28 per square foot (psf) in June 2007, up from $3.65 psf for the same period in 2006.
Turnover for the quarter was $9.9 million compared with $8 million a year ago. For H1 2007, turnover was $18.7 million – a 17.7 per cent increase.
Net property income improved by 23.3 per cent to $13.75 million for H1 2007. For the quarter, net property income rose 30.4 per cent to $7.28 million.
KAM also said that with 70 per cent of the existing portfolio’s net lettable area due for renewal between 2007 and 2010, K-Reit was in a good position to ‘capitalise on the market upswing’. It added: ‘Strong underlying demand combined with limited quality office space will continue to support high occupancies and rental growth.’
K-Reit’s portfolio is valued at $677 million as at Dec 31, 2006. KAM said it has a target portfolio size of $2 billion over the next few years and the Reit is actively seeking acquisitions of prime commercial properties in Singapore and other other Asian growth cities. K-Reit is also reviewing possible asset enhancement initiatives to add value to the existing portfolio.