Month: September 2007
AI-Trust – SSB
1) Evolving regulatory risks in respect to forex repatriation of funds.
2) Forex volatility adversely impacting returns.
3) Potential supply/demand risks in IT/ITES locations.
4) Conflicts of interest between sponsor and a-iTrust.
Cambridge : SGX
Cambridge Industrial Trust Management Limited issues Circular to Unitholders relating to, among other things, the acquisition of six Target Properties by Cambridge Industrial Trust
• CIT to issue New Units for a private placement to raise up to S$193.9 million to fund the acquisition of the Target Properties
• Property portfolio expected to increase 60.7% in value to S$879.8 million with 40 properties as compared to S$547.4 million with 27 properties since Initial Public Offering (“IPO”)
• Forecast Period 2007 DPU (annualised) enhanced by 9.4%1 vs IPO 2007 Projection DPU of 5.12 cents
• Projection Year 2008 DPU at 5.799 cents, an increase of 3.5% over Forecast Period 2007 DPU2
• CIT’s Aggregate Leverage to be reduced from 48.2%3 to 38.1%3
1 Assumes completion of the Equity Fund Raising, completion of the acquisitions of the Target Properties and the Natural Cool Building and a private placement issue price of S$0.80.
2 Assumes completion of the Equity Fund Raising, completion of the acquisitions of the Target Properties and the Natural Cool Building and a private placement issue price of S$0.80.
3 Estimated as at 31 August 2007 based on CIT’s existing portfolio of 33 properties.
3 Computed based on forecast net borrowings and total assts of CIT as at 31 October 2007, assuming the completion of the Equity Fund Raising, and the acquisition of the six Target Properties and Natural Cool Building, bringing CIT’s portfolio from 33 to 40 properties.
Extracts of Press Release
The increased portfolio size is expected to provide CIT with a stronger platform for future acquisition growth. With the increased number of properties since IPO, CIT is pleased to announce that its DPU is expected to increase by 9.4%, from CIT’s IPO 2007 Projection DPU (of 5.12 cents, obtained from CIT’s prospectus dated 14 July 2006) for the CIT’s initial portfolio, to 5.604 cents (on an annualised basis) for the forecast period from 18 September 2007 to 31 December 2007 (the “Forecast Period 2007”) for the Enlarged Portfolio. Based on CIT’s Enlarged Portfolio, the projected DPU for the financial year ending 31 December 2008 is approximately 5.799 cents, an increase of 3.5% over the forecast DPU (annualised) for the Forecast Period 2007.
Mr Wilson Ang, Chief Executive Officer of CITM, said, “The completion of these properties will bring our property portfolio under management from S$689.4 million to S$879.8 million and increase total Unitholders’ distributions. The Equity Fund Raising will reduce our gearing ratio from 48.2% to 38.1% and give us more acquisition capacity to grow. After our planned S$193.9 million fund raising, CIT’s distribution per unit to Unitholders will be enhanced by 9.4% for 2007 compared to our IPO projections and we expect further growth of 3.5% in 2008. Based on our Projection Year 2008 DPU of 5.799 cents and an illustrative issue price of S$0.80, CIT offers investors an attractive yield of 7.2%.”
Source : SGX
Parkway Life – SGX
THE INITIAL PUBLIC OFFERING (THE “OFFERING”) OF UNITS (THE “UNITS”) IN PARKWAY LIFE REAL ESTATE INVESTMENT TRUST (THE “REIT”)
UBS AG, acting through its business group, UBS Investment Bank, as stabilising manager designated in connection with the initial public offering of the REIT, wishes to announce that it has as of 6 September 2007 ceased to undertake any stabilisation action.
UBS AG, acting through its business group, UBS Investment Bank has exercised the over-allotment option granted by Parkway Investments Pte Ltd in part on 6 September 2007, in respect of 11,097,000 Units, solely for the purposes of covering the balance of the 11,097,000 Units which had been overallocated in connection with the Offering, and which were not covered by purchases made under the price stabilising action.
Source : SGX
MMP – OCBC
Defensive in uncertain market
Slight growth in 2Q07 results. Macquarie MEAG Prime REIT’s (MMP)recently reported its 2Q07 result that was broadly in line with our expectation. Revenue growths were tepid at 5.5% YoY and 1.1% QoQ to S$23.6m. Net property income (NPI) did better sequentially, improving 4.0% (+3.5% YoY). This was due to lower expenses related to leases renewal commission and depreciation. DPU for 2Q07 was 1.50 cents (+4.2% YoY and 2.0% QoQ). The key reason for the slightly better performance was better rentals and lower operating expenses.
Buys into China and Japan. MMP has recently been pretty active on the acquisition front, buying properties in Japan for about S$182m and in Chengdu for S$70m. The Chengdu property will have an attractive NPI yield of 7.5% and will be guaranteed for 2 years. Though these purchases are small in absolute terms and the bottom line growth impact is only about 5%, the impact on MMP’s asset size is more material at about 17% or by about S$250m to S$1.8bn. We expect these acquisitions to be fully debt funded and this is likely to push gearing to about 33% (from 26% in 1Q07), still well within the allowable limit. In terms of DPU growth from these acquisitions, we have already allowed for this in our FY08 DPU of 6.4 cents hence will maintain our forecast for now.
Organic growth to come from office. MMP’s office space is presently under-rented with rents at about S$5 psf/mth, whereas market rents are approaching the S$10-13 psf/mth mark. More importantly, with 182,000 sq ft (about 70% of office space) of leases due for renewal over the next two years, we see good potential for upward revisions in rental rates.
Maintain BUY. MMP remains one of the very few REITs with a low priceto-book ratio. This low valuation means that it is likely to be more resilient in market uncertainty. Since our last report (April 07), MMP’s share price has corrected by only about 2%. It is currently trading at just under 1.0x P/B and implies that the market has not factored in growth. With a DPU yield of about 5.0% and a capital value upside of about 8.0%, total return of over 13% is possible with little downside risk. We thus remain positive on MMP and see it as one of the lowest-risk REITs in the market. Maintain BUY with a fair value of S$1.32.