Month: September 2007
AREIT – BT
A-Reit plans US$180m developments
SINGAPORE – Singapore’s Ascendas Real Estate Investment Trust (A-Reit) will spend $270 million (US$180 million) building new business facilities in the next few months as it shifts focus to development rather than acquisitions, its chief said on Tuesday.
Chief executive officer Tan Ser Ping said A-Reit’s ability to create new assets would allow it to stay on track to reach a portfolio size of $5 billion by 2010, despite stiff competition for existing assets.
‘When there are good acquisition opportunities we will go for them. But if there are none, we’re not going to cry. There are other things to do,’ Mr Tan said in an interview.
A-Reit, Singapore’s third-largest property trust by market value, currently has a portfolio of 78 business and industrial properties – valued at US$3.3 billion as of end-June.
But unlike rivals such as Mapletree Logistics, Cambridge Industrial and MacathurCook Industrial who position themselves as Reits based on regional industrial assets, its assets are all located in Singapore.
Mr Tan said A-Reit would continue to focus on the republic for growth since including overseas assets in A-Reit’s portfolio would affect its cost of borrowing and change its risk profile.
The trust’s main shareholder, Singapore government-owned Ascendas, last month listed Ascendas India Trust, a business trust based on Indian business parks.
‘For markets such as India where you have the depth and width of potential, it’s better to have separate geographically focused vehicles,’ Mr Tan said. — REUTERS
PST – BT
Pacific Shipping to buy US$200m of ships a year
(SINGAPORE) Singapore’s Pacific Shipping Trust is in advanced negotiations to buy several ships and plans to add US$200 million worth of ships yearly to its current portfolio of eight container vessels, its CEO told Reuters yesterday.
Pacific Shipping, which has a market cap of US$148 million, is also looking at diversifying its fleet and is particularly interested in bulk carriers, which are currently enjoying ‘exceptionally’ good charter rates.
‘Before the stock markets crashed, there was a tremendous amount of liquidity chasing ships, driving up prices to a point where the corresponding charter rates did not make sense anymore,’ Pacific Shipping chief executive officer Subhangshu Dutt told Reuters in an interview.
Liquidity-rich private equity firms such as Seacastle, linked to the US-listed Fortress Investment Group, and Bear Stearns Merchant Banking have bought up vessels and shipping lines this year, but Mr Dutt said the ‘buying frenzy’ has since died down. ‘Now at least we can sit down and discuss, and prices are no longer a moving target,’ he said.
Mr Dutt said two new container ships that the trust acquired this month for US$136 million will be funded by bank loans, as the ongoing global credit crunch sparked by the US sub-prime crisis has not impacted the shipping sector.
‘The perception for shipping has not changed, which is that it’s backed by solid fundamentals and assets,’ he said, adding that charter rates for container ships should continue rising for the rest of the year, until a seasonal slowdown in early 2008.
Mr Dutt said Pacific Shipping has no need to issue new shares in the trust until 2009, after the two new ships are delivered. ‘Only then will we have the revenue stream to match the new equity. Otherwise we will end up diluting the yield,’ Mr Dutt pointed out.
Pacific Shipping was listed in May 2006 and was the first of three shipping trusts to trade on the Singapore Exchange.
First Ship Lease and Rickmers Maritime Trust have market caps of US$425 million and US$342 million.
Of the three shipping trusts, Pacific Shipping is the only one whose stock is trading at above its IPO price, though Mr Dutt said the trust’s stock price and trading volumes are still ‘below expectations’.
‘We had hoped to see an increase in price and trading volumes with the two new trusts coming in, but we haven’t seen that happening,’ Mr Dutt noted. ‘We’ll need more time and effort to help investors understand the benefits of shipping trusts.’ – Reuters