Month: January 2008
AscottREIT – BT
ART distributable income for Q4 up 54% to $12.8m
ASCOTT Residence Trust (ART), which owns serviced apartments, yesterday announced distributable income of $12.8 million for the fourth quarter, boosted by new acquisitions and strong operating performance.
The distribution for the three months ended Dec 31, 2007 is 16 per cent better than its forecast and 54 per cent up year-on-year.
Distribution per unit for the quarter was 2.12 cents, 16 per cent higher than projected and a rise of 28 per cent year-on-year.
The quarter’s results brought full-year distributable income to $45.1 million, 12 per cent better than forecast.
Full-year distribution is 7.7 cents per unit, 9 per cent higher than projected. Revenue for the quarter came to $42.9 million, beating ART’s projection by 10 per cent and 47 per cent higher year-on-year. Full- year revenue was $154.8 million, beating projection by 7 per cent.
Revenue was higher on new acquisitions and greater income stability through increased diversification, especially into rental housing which now makes up 22 per cent of its portfolio.
ART recognised a revaluation surplus of $136.9 million (net of tax and minority interest). The group’s net asset value per unit as at Dec 31, 2007, was $1.60, up from $1.33 a year ago.
ART is a Pan-Asian serviced residence real estate investment trust managed by Ascott Residence Trust Management Limited (ARTML), a subsidiary of The Ascott Group.
It was launched in March 2006 with an initial portfolio of 12 properties across Asia. Upon the completion of its latest acquisition in Perth, its portfolio will expand to 37 properties in 11 cities, valued at $1.52 billion.
Lim Jit Poh, chairman of ARTML, said: ‘We will continue to pursue organic and acquisition growth to deliver growing and stable income to unit-holders. We remain focused on achieving our target total asset portfolio of $2 billion by end-2008.’
The trust said that operating performance this year is expected to grow.
ART yesterday closed at $1.18, up one cent.
MapleTree – BT
MapletreeLog defers its proposed rights issue
GLOBAL capital market volatility has forced Mapletree Logistics Trust (MapletreeLog) to defer its proposed rights issue aimed at raising up to $500 million to fund acquisitions.
The rights issue was announced late last month, but this was swiftly followed earlier this month by Moody’s Investors Service placing the ‘Baa1’ rated real estate investment trust (Reit) on review for a possible downgrade because of its high gearing of over 50 per cent and the market conditions.
Speaking at a press conference yesterday, Chua Tiow Chye, CEO of Mapletree Logistics Trust Management (MLTM), the Reit’s manager, said candidly that MapletreeLog’s share price had been ‘beaten down’ since the rights issue was proposed. He added that it would not ‘raise funds at any price’.
‘We will revisit our fund-raising exercise when market conditions are more conducive,’ MLTM said in a statement yesterday.
MapletreeLog yesterday reported distributable income of $19.7 million, a 68 per cent year-on-year rise, for the fourth quarter ended Dec 31, 2007.
MapletreeLog started FY2007 with 41 properties and ended the year with 70, a rise of 29. ‘Of these 29 properties, nine were acquired during the fourth quarter, bringing the trust’s portfolio size to 70, valued at about $2.4 billion,’ said Mr Chua. The asset value as at Dec 31, 2006, was about $1.43 billion.
MapletreeLog’s full-year 2007 distributable income came to $71.8 million, 78 per cent up year-on-year.
Available distribution per unit (DPU) for Q4 2007 was 1.78 cents, a 23 per cent year-on-year increase. On a full-year basis, DPU was 6.57 cents, 16 per cent higher than its forecast and 30 per cent up year-on-year.
As at Dec 31, 2007, five of its acquisitions pending completion amounted to $183 million, while gearing stood at 53.4 per cent, representing a total debt of about $1.3 billion.
MapletreeLog said that it is comfortable with a 40-45 per cent leverage in the long run, but its current leverage leaves it with an available debt capacity of $405 million to fund future acquisitions.
While this leaves MapletreeLog with ‘enough headroom’ to fund these acquisitions, Richard Lai, deputy CEO of MLTM said that one of the options (for raising funds) open to MapletreeLog would be to sell some of its assets. While there were no plans to sell any buildings, Mr Lai said: ‘We have people knocking on our doors.’
Looking forward, Mr Chua cited the ‘internal logistics’ sector in China and India as showing most potential.
But apart from those acquisitions already announced in Q4 – including three in China, four in Malaysia and two in Japan – Mr Chua was careful to add that given market conditions, MapletreeLog would be more ‘selective’ with respect to new acquisitions.
Instead, he said that ‘yield optimisation’, with a possible upside from rental reversions from 180,000 sq m, would be its driving strategy for 2008. Making reference to the volatile global market conditions, he added: ‘It would be foolish to go for aggressive acquisitions.’
KREIT – BT
K-Reit plans rights issue; Q4 distributable income up 62.6%
Distributable income boosted by One Raffles Quay, higher rental contributions
K-REIT Asia, which yesterday posted a 62.6 per cent year-on-year jump in fourth-quarter distributable income to $6.9 million, is proposing a rights issue to raise gross proceeds of up to $700 million.
Net proceeds from the issue will be used to repay part of the $942 million bridging loan it took from Keppel Corp when it purchased a one-third stake in One Raffles Quay last year.
The issue price will be determined closer to the launch date and will be at a discount of up to 20 per cent to the then-prevailing trading price. On the stock market yesterday, K-Reit ended two cents higher at $1.50.
The trust, which owns prime office space in Singapore, plans to proceed with the rights issue ‘as soon as practicable’ instead of waiting until September when the bridging loan expires, K-Reit Asia Management Ltd’s chief executive Tan Swee Yiow said yesterday.
The rights issue will be effectively fully underwritten. Keppel Land and Keppel Corp, which jointly own about 72 per cent of K-Reit, have undertaken to take up their respective provisional allocations of rights shares and to make excess applications for any rights units not subscribed for by minority shareholders. However, Mr Tan said the intention is to keep K-Reit listed, which would mean that it must have a free float of at least 10 per cent.
Asked about the impact that the sub-prime crisis will have on demand for Singapore office space given layoffs at international banks, major occupiers of prime CBD offices, Mr Tan acknowledged it will probably result in tenants becoming more cautious in their forward planning commitment of space.
K-Reit’s 62.6 per cent rise in Q4 distributable income included a $2.8 million maiden contribution from One Raffles Quay. K-Reit completed the acquisition of its one-third stake in the prime office development in December last year. Also contributing to the improved Q4 performance was higher rental income arising from higher rental rates achieved for new and renewed leases.
Average gross monthly rental rates for the investment properties directly held by K-Reit rose from $3.80 per square foot (psf) in December 2006 to $4.65 psf in December 2007.
Net property income for the quarter ended Dec 31, 2007 was slightly over $7 million, up 13 per cent from the corresponding year-ago period. Gross rental income rose 19 per cent to $39.1 million last year.
K-Reit’s unitholders will receive a distribution per unit (DPU) of 4.99 cents for 2007’s July-December period.
The full-year payout amounts to 8.82 cents, reflecting a distribution yield of 5.88 per cent based on yesterday’s closing price.
For the year ended Dec 31, 2007, distributable income increased 42.5 per cent to $21.8 million, while net property income rose 19.6 per cent to $28.3 million.
The $951.4 million acquisition of the One Raffles Quay stake, coupled with portfolio revaluation gains of $433 million, have enlarged K-Reit Asia’s portfolio size by 210 per cent to $2.1 billion as at end-2007 from $677 million as at end-2006.
FrasersCT – DBS
Steady first quarter
Comment on Results
FCT reported 1Q08 results in line with expectations. Gross revenues were relatively flat y-o-y at S$20.1m. Main contributions were from the increase in rentals of renewed leases with over 10.7% rental reversions from the preceding period. DPU for 1Q08 is up 5% y-o-y to 1.6 cts.
Occupancy levels were slightly higher at 99.3% as at 30 Dec 07 (94.5% in preceding quarter) mainly from improvement in occupancy rates in Anchorpoint mall.
Gearing at 31%. FCT’s gearing level of 31% is well within the potential 60% limit, giving it a potential S$280m worth of debt-funded acquisitions that we expect will be utilised for the purchase of Northpoint II in 4Q08.
Recommendation
With exposure to the buoyant suburban retail scene, FCT is poised to benefit from positive rental reversions (up to 60% of NLA expiring in FY08-FY09), asset enhancement initiatives, and a steady pipeline of sponsor assets. Collectively, these factors will drive DPU growth moving forward through 2010.
Target price maintained at S$1.71. Currently trading near its NAV, we see value emerging from recent price pull back and we look forward towards the pipeline injection of North Point II (expected 4Q08) for AUM growth, not discounting further upside surprise from potential 3rd party and overseas acquisitions.
MapleTree – CIMB
Asia’s logistics industry remains positive
• 4Q07 results above expectations. Revenue was up 49.9% yoy to S$40.3m while distributable profit was up 67.8% yoy to S$19.7m. Full-year revenue was S$141.7m with a distributable profit of S$71.8m and DPU of 6.57cts, which is 2% above our ‘s and consensus’ forecast. The strong performance in the last quarter was attributed to increased revenue from nine acquisitions completed in the quarter. 2007 operating expenses were significantly below expectations as a result of economies of scale. As at 31 Dec 07, MLT’s portfolio reached S$2.379bn, with revaluation gains of S$125.58m.
• Fund-raising postponed, gearing pushing towards regulatory limit. MLT is postponing a rights issue earlier expected to be carried out in the first quarter, due to volatile global capital markets. It remains confident of achieving acquisitions already announced but not yet completed, amounting to S$382m, without equityfunding. Further, management would be concentrating on organic growth, with some 180,000 sq m of logistics space due for renewal. Reversion rates are to be higher than the average of 9.3% in 2007.
• Maintain Outperform; DDM-derived target price lowered to S$1.36 from S$1.65. MLT is expected to gear up to its regulatory limit of 60% in 2008 as equity fund-raising would be difficult. As at 31 Dec 07, MLT’s leverage was 53.4%, and debt headroom of S$405m leaves limited room for our target acquisitions of S$800m this year. We have thus cut our acquisitions target to S$600m a year for 2008-10, with an asset leverage assumption of 60% for 2008. Cost of equity assumption is unchanged at 6.9%. As a result, our DPU estimates for FY08-09 have been reduced by 2-12%. Accordingly, our DDM-derived target price drops to S$1.36. Maintain Outperform as MLT’s underlying assets remain good and the outlook for Asia’s logistics industry remains positive.