Month: October 2007
MI-REIT – SGX
MACARTHURCOOK INDUSTRIAL REIT ACQUIRES CHANGI PROPERTY FOR S$20.8 MILLION
– Increases FY2008 DPU by 0.23 cents to 7.64 cents per unit and FY2009 DPU by 0.22 cents to 7.81 cents per unit
Singapore, 24 October 2007 – MacarthurCook Investment Managers (Asia) Limited
(“MCKIM Asia”), the Manager of MacarthurCook Industrial REIT ( “MI-REIT”), is pleased to announce that MI-REIT, through its Trustee, HSBC Institutional Trust Services (Singapore) Limited ( the “Trustee”), has signed a conditional call option agreement (the “Agreement”) to acquire a logistics and warehouse building from Prologis Singapore Pte Ltd ( “Prologis” or the “Vendor” ).
The property at 11 Changi South Street 3 (the “Property” ) will be sub-leased to its current tenant, Builders Shop Pte Ltd ( “Builders”) for the remainder of the existing 10 year lease term, which commenced on 16 December 2004. Builders, a division of SGX-listed Shining Corporation Limited, is primarily engaged in the supply of quality building materials. The acquisition is expected to be completed by 4Q FY2007.
At an initial yield of 7.23%, the acquisition of the Property is accretive to MI-REIT’s distribution per unit (“DPU”). The pro forma financial effect of the acquisition on DPU is:
– an additional 0.231 Singapore cents per unit, representing an increase of 3.10% from the forecasted FY2008 DPU of 7.41 Singapore cents per unit2 for the financial year ended 31 March 2008 (“FY2008”); and
– an additional 0.221 Singapore cents per unit, representing an increase of 2.90% from the forecasted DPU of 7.59 Singapore cents per unit2 for the financial year ended 31 March 2009 (“FY2009”).
Rationale for the acquisition
Mr Chris Calvert, CEO of the Manager, said: “We are pleased with the acquisition of 11 Changi South 3, which is a strategic operational fit for MI-REIT’s industrial property portfolio.
The acquisition expands our presence in Singapore’s logistics and warehousing property sector and brings our total investments to over S$500.9 million3 in 16 properties.”
The acquisition increases MI-REIT’s exposure to the tightly held Changi industrial precinct and the average lease expiry profile from 6.3 to 6.4 years.
Other benefits of the acquisition to MI-REIT’s portfolio include:
FrasersCT – OCBC
Investment case remains intact
4Q slightly better than expected. Frasers Centrepoint Trust’s (FCT) delivered 4Q07 revenue of S$19.8m, 5.0% higher than its prospectus guidance, 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$1.23m and this was attributed to associate income (from the recent acquisition of Hektar REIT), which was not anticipated in the forecast. The results are broadly in line with our estimates.
Anchorpoint refurbishment to complete in Nov. FCT’s asset enhancement of Anchorpoint Shopping Centre (ASC) is on track for completion by Nov 2007. The indicative rent from the revamped ASC is S$7.2 psf/month and this is about 35% above the preceding rent. The next asset that is likely to be revamped will be Northpoint and construction to commence in early 2008. This refurbishment is likely to be very extensive and would involve a seamless integration with the extension (Northpoint 2) that is presently being built by its sponsor. This in turn will affect DPU marginally and delay growth to FY09. We have thus revised our FY08F
DPU from 7.57 cents to 6.87 cents. FCT has also indicated that Northpoint 2 is likely to be acquired by late FY08 and should increase its portfolio size by about 10%.
Price to book is down as we expected. In our Aug 2007 report on FCT, we had articulated that the market could be punishing FCT for its perceived high valuation as measured by its Price/Book (P/B) ratio. We argued that the high ratio was mainly due to the fact that FCT had not revalued its book at its 1H results, unlike other retail REITs which did, thus resulting in much lower P/B ratios relative to FCT. In the current results, FCT has revalued its assets and has achieved a revaluation surplus of about S$52.5m (+ 5.6%). This in turn has bososted its book value to S$1.16 (from S$1.09). More importantly, this new NAV has lowered its P/B to only 1.29x (down from 1.4x in Aug) and in line with the sector average.
Maintain BUY. The investment case for FCT is simple; pipeline of properties to acquire from its parent, growth from asset enhancements, and rent reversions. The investment case remains intact and growth should start to materialize from FY09. We maintain our BUY rating and our fair value at S$1.67.
a-iTrust – DBS
Valuation remains attractive
Comment on Results
1HFY08 results in line with expectations. Total property revenue grew 54% to S$48.5m, as a result of the inclusion of CyberPearl and ITPC to the portfolio, higher rental rates and the leasing of Navigator Building at ITPB (completed in Jan 07). Distributable income of S$22.2m was 17% higher than forecast, with a reported DPU of 2.95 cents.
NAV. As at 30 Sep 07, A-iTrust has an NAV of S$869.6m and this translates to S$1.16 per unit. This is 10% higher than the pro forma NAV of S$1.05 per unit at listing.
Recommendation
Strategy. Moving forward, a-iTrust will continue to seek organic growth, develop its in-built development pipeline and grow via acquisitions. With debt headroom of at least S$150m, this provides a-iTrust the capacity to make third-party acquisitions or undertake further development projects.
Maintain Buy, target price of S$1.84. Based on DDM valuation, we have a raised target price of S$1.84 due to Vega, the completing 5th building at The V (Hyderabad), which added 408,000 sq ft SBA instead of the earlier disclosed 377,000 sq ft.
We have reduced our DPU forecast by 3% in FY08 due to the expected completion for The Crest being delayed from Aug 07 to Nov 07.
a-iTrust – BT
Ascendas India Reit beats forecast
Its H1 distributable income of $22.2m beats estimate by 17%
HELPED by higher rental rates from its assets, Ascendas India Trust (a-iTrust) achieved distributable income of $22.2 million for the half year ended Sept 30, beating its estimate by 17 per cent.
Its distribution per unit for the period was 2.95 cents, giving an annualised yield of 5 per cent based on its initial public offer price of $1.18 per unit.
Its net property income touched $28.7 million, 66 per cent higher than the year-ago period and 18 per cent better than forecast.
a-iTrust has a diversified portfolio of four IT parks in Bangalore, Chennai and Hyderabad.
Over the first half year, 700,000 square feet of space within the portfolio of operating buildings was renewed or leased, at higher average rental rates than before. The overall occupancy rate of a-iTrust’s portfolio was 99 per cent as at Sept 30.
Ascendas Property Fund Trustee, the trustee-manager of a-iTrust, said it expects the trust to deliver the forecast performance for the second half of the year, and hence is confident of at least meeting the DPU forecast of 5.6 cents for the full year.
‘We are pleased to report a strong set of results which has benefited from the vibrant Indian IT-ITES sector, resounding support from the user-clients and the trustee-manager’s proactive asset and portfolio management,’ said the chief executive officer of the trustee-manager, Jonathan Yap. ‘We remain focused to build on the momentum and deliver returns to unitholders.’
The two completing buildings in the a-iTrust’s portfolio – Crest and Vega – have received strong pre-commitment of 73 per cent and 72 per cent of space respectively and income contribution is expected to start in the second half of 2007.
Besides having a right of first refusal from Ascendas Land International to acquire income-accretive business space, the trustee-manager said it is also pursuing acquisition opportunities from the market.