Month: November 2007
LMIR – BT
Lippo-Mapletree trust falls 3.1% in market debut
(SINGAPORE) Shares of property trust Lippo- Mapletree Indonesia Retail Trust started trade yesterday at 77.5 cents in their Singapore stock market debut, down 3.1 per cent against the issue price of 80 cents a unit.
The units closed yesterday at 68 cents, down 12 cents or 15 per cent from the initial public offer (IPO) price.
Indonesia’s Lippo Group and Singapore’s Mapletree Investments sold 645.47 million shares at 80 cents, raising $516 million in their IPO for a joint property trust.
The Lippo-Mapletree Indonesia Retail Trust is based on around $1 billion worth of properties that comprise seven Indonesian shopping malls and seven retail spaces found in other malls, the prospectus said.
The listing of the Indonesian trust comes after Saizen Real Estate Investment Trust (Reit), which is based on residential buildings in Japan, tumbled 14 per cent in its Singapore market debut on more than a week ago.
Saizen’s sharp fall prompted Japan’s Asia Pacific Land to delay a US$350 million IPO in Singapore.
Mapletree, which is owned by Singapore investment company Temasek Holdings , has a 40 per cent stake in the joint venture that will manage the Indonesian trust.
The Lippo conglomerate, controlled by Indonesia’s Riady family, owns the remaining 60 per cent. — Reuters
PLife – UOBKH
An oasis in time of turbulence
Parkway Life REIT invests in income-producing real estate assets in the Asia Pacific region. The assets, used primarily for healthcare and related purposes, include hospitals, ambulatory surgery centres, primary clinics, medical office building, step-down care facilities such as nursing homes, research & development (R&D) facilities and pharmaceutical facilities. The initial portfolio comprises Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital in Singapore.
Riding on growth in healthcare focus. The annual rental payable by Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital comprises base rent and a variable rent. Total annual base rental from the three hospitals is S$30m. The variable rent is equivalent to 3.8% of adjusted hospital revenue. Adjusted hospital revenue encompasses inpatient, outpatient, car park, retail, pharmacy and food & beverage revenues. The variable rent allows unit-holders to ride on the growth of the healthcare industry due to an ageing population, medical tourism and growing affluence in Singapore and across the region.
Downside protection enhances defensive qualities. The minimum rent payable by each hospital is set at Consumer Price Index + 1% above rent payable in the preceding year. Where Consumer Price Index is negative for any given year, then it is deemed to be zero. This ensures that total rent payable is always increasing, which enhances the defensive quality of Parkway Life REIT.
Reiterate BUY. We like Parkway Life REIT for its healthcare focus. Acquisitions in Singapore and in the region will provide catalysts for growth in distribution yield. Parkway Life REIT trades at a discount of 6.4% to NAV/unit of S$1.25. Our target price is S$1.72 based on the discounted dividend model (WACC: 6.2%, terminal growth: 2%).
FirstREIT – UOBKH
High yield a reflection of riskier profile
First REIT invests in a diversified portfolio of income-producing real estate assets in Asia used primarily for healthcare and related purposes.
Riding on healthcare growth in Indonesia. First REIT’s initial portfolio comprises Siloam Hospitals Lippo Karawaci, Siloam Hospitals West Jakarta, Siloam Hospitals Surabaya and Imperial Aryaduta Hotel. The largest asset Siloam Hospitals Lippo Karawaci is located in Lippo Karawaci Township and is just 8km away from Soekarno-Hatta International Airport in Jakarta. It specialises in neuro-science and cardiology and provides annual base rental of S$11.7m.
Sponsor Lippo Karawaci has leased the four properties for 15 years with option to renew for another 15 years. The total base rent is S$24.1m, subject to annual increase equivalent to 2xCPI but capped at 2%. The rentals will be paid in S$ based on predetermined exchange rate of Rp5623.5 per S$. The variable rent is calculated based on growth in gross revenue generated at the four properties in the preceding calendar year:
a) 0.75% of gross revenue if growth is more than 5% but less than 15%;
b) 1.25% of gross revenue if growth is more than 15% but less than 30%, and;
c) 2% of gross revenue if growth is 30% or more.
Assets in Singapore provide diversification. First REIT has acquired Pacific Healthcare Nursing Homes at Bukit Merah and Senja in Apr 07, The Lentor Residence in Jun 07 and the Adam Road Hospital in Jul 07. The four healthcare facilities in Singapore have increased value of its portfolio from S$257m to S$308.8m. Rental income expanded 8.2% qoq to S$7m, reflecting contributions from the newly acquired properties. First REIT plans to redevelop Adam Road Hospital to increase net lettable area.
Acquisition growth strategy in China. First REIT signed MOUs to acquire 90-bed Wuxi New District Phoenix Hospital, 200-bed Shanghai Woman & Child Healthcare Hospital, the proposed Hengshan Urology Hospital and 500-bed Nantong Rich Hospital. First REIT will also explore potential acquisitions with Sponsor, Lippo Karawaci in Indonesia. Management is confident of raising portfolio of investment properties to S$500m before end-2009.
Sponsor Lippo Karawaci is the largest property developer listed on Jakarta Stock Exchange with market capitalisation of US$1087.5m. It owns a diversified portfolio comprising township and residential developments, commercial and retail developments and healthcare, infrastructure and hospitality properties. Lippo Karawaci has a 20.3% stake in First REIT and has granted first right of refusal over future sales of healthcare related hospitality assets.
High yield but high risk. 83.3% of First REIT’s investment properties is located in Indonesia and denominated in Indonesian Ruppiah. It adopts a natural hedge strategy by borrowing in the same currency as the underlying assets. DPU was 1.72 cents for 3Q07, representing distribution yield of 9.1%. This provides a spread of only 0.7% over Bank Indonesia intervention rate at 8.25%. First REIT trades at a discount of 13.6% to NAV/unit of S$0.88.
Ascott Reits – SSB
– Strong organic growth from Vietnam, Singapore and Philippines ¨C Properties in these three countries are enjoying high occupancies of 80% to 90% and should see double-digit FY08E RevPAU growth of 11% to 38% due to strong economic growth and FDI flows, which support demand for mid-term accommodation against a backdrop of tight hotel room supply and rising rents for rental properties.
– AUM target of S$2b by end-2008 appears achievable ¨C Its portfolio has grown 47% from S$856m since its listing in Mar 2006 to S$1.26b as at end-Sep 2007 through acquisition of third party and sponsor assets. A potential S$500m worth of properties from Ascott Group could be injected before end-2008.
– Key mid-term risk ¨C We estimate 48% of revenues are denominated in USD in FY08E and FY09E. A structural mid-term US$ decline can translate to lower DPU. Our estimates suggest that a further 1% fall in US$ from our base case will lower FY08E and FY09E DPU by 1.4% and 1.5%, respectively.
Allco – CSFB
– ALLC has made seven acquisitions and tripled its portfolio value since listing. We believe that its increasing traction on acquisitions and diversification into new markets reflects management.s execution capabilities and flexibility to acquire in strategic markets. ALLC is also one of the most tax efficient REIT, allowing it to enjoy greater opportunities in target markets.
– ALLC is currently trading at a discount of 40.3% to NAV, which we believe is too steep and unjustified given its significant growth through acquisitions which has been overlooked.