Month: March 2008
Suntec – SGX
Singapore, 13 March 2008 – ARA Trust Management (Suntec) Limited (“ARA Suntec”), the Manager of Suntec Real Estate Investment Trust (“Suntec REIT”), is pleased to announce that further to the earlier acquisition of approximately 1,261 square metres (13,572 square feet) of land along Penang Road in July 2007, it has today acquired an additional strip of land of about 103 square metres (1,105 square feet) at a land premium of S$1.2 million for amalgamation with Park Mall to create an additional floor area of 474 square metres (5,105 square feet) for the property.
Combined with the earlier acquisition, the total acquisition cost of the land amounted to S$15.6 million, and the total permissible gross floor area for Park Mall will increase by about 6,300 square metres (67,810 square feet) to 41,966 square metres (451,727 square feet).
Mr Yeo See Kiat, Chief Executive Officer of ARA Suntec, said, “I am pleased that we were able to acquire this additional strip of land which would further strengthen our asset enhancement plans for Park Mall.”
Suntec – SGX
Further to the announcements dated 28 February 2008 and 29 February 2008 relating to the issue of convertible bonds due 2013 (the “Convertible Bonds”), ARA Trust Management (Suntec) Limited, as manager of Suntec Real Estate Investment Trust (“Suntec REIT” and manager of Suntec REIT, the “Manager”), is pleased to announce that Singapore Exchange Securities Trading Limited (the “SGX-ST”) has today confirmed that the approval in-principle granted on 14 September 2007 and 8 October 2007, for the listing and quotation of (i) the new ordinary units in Suntec REIT (“Units”) to be issued upon the conversion of the Convertible Bonds (the “Conversion Units”) and (ii) the Convertible Bonds respectively, remains valid.
The Manager intends to issue the Convertible Bonds on or around 20 March 2008.
The SGX-ST’s in-principle approval is not an indication of the merits of the Conversion Units and the Issue of Convertible Bonds.
MMP – Media Release (SGX)
SINGAPORE, 13 March 2008 – Macquarie Pacific Star, the Manager of MMP REIT, today announced that it has refinanced S$220 million of short-term loans, S$190 million of which are due in May 2008 and another S$30 million due in August 2008.
In light of the strategic review of MMP REIT announced on 19 February 2008, the new funding has been arranged to extend the maturity of the facilities until end September 2008. The renewals have been secured on competitive terms and will not have a material impact on Distribution Per Unit to unitholders. The refinancing, which is expected to cover the period during which the strategic review is undertaken, will allow the review to proceed with flexibility and remove the need to incur additional costs to unwind longer-term loans, which may be necessary if there is a transaction pursuant to the strategic review.
Mr Franklin Heng, Chief Executive Officer of Macquarie Pacific Star, said, “The successful refinancing of MMP REIT’s debt facilities demonstrates the strong credit quality of MMP REIT, with finance providers continuing to support the trust.
“We remain committed to securing the most optimal financing arrangements to maximise returns to unitholders. We will continue to monitor MMP REIT’s funding position throughout the strategic review and will put in place funding strategies which address the various scenarios which may emerge.
“MMP REIT’s credit worthiness is supported by the high quality of MMP REIT’s underlying assets, low gearing, rental reversions, occupancy levels and tenancies. These attributes remain unchanged.”
AREIT – BT
Goodman exit seen as chance for A-Reit expansion
IN A move that could pave the way for Ascendas Real Estate Investment Trust (A-Reit) to finally expand overseas, Australia’s Goodman Group has exited the trust.
Goodman is selling its 40 per cent stake in the entity that manages A-Reit as well as a 6.28 per cent stake in the trust itself. The latter transaction is for $158.16 million or about $1.90 per A-Reit unit. The counter closed at $1.95 yesterday, down two cents.
The buyers in both transactions are fully owned units of Ascendas Pte Ltd, which will gain full control of the Reit manager, which will be renamed from Ascendas-MGM Funds Management to Ascendas Funds Management (S).
Ascendas’ stake in A-Reit will also go up to 26.77 per cent.
An announcement last night put an end to speculation late last year that Goodman would exit A-Reit. Market watchers expected Goodman to sell its stake in the A-Reit manager when the Australian group was tipped to land the job of managing a proposed Reit that will hold some properties being divested by JTC Corp.
The strategy would have been to remove the conflict of interest of Goodman having an interest in two Singapore industrial Reit managers potentially competing for the same assets and tenants.
However, JTC eventually gave its Reit management job to Mapletree Investments in February. Although Goodman did not clinch that deal, some market watchers nonetheless welcome Goodman’s exit from A-Reit’s manager, as it paves the way for A-Reit to invest in properties outside Singapore.
A-Reit has never expanded overseas because of an understanding among the shareholders of the Reit manager to avoid conflict of interest, analysts say.
Goodman Group CEO Greg Goodman possibly hinted almost as much when he told BT last night that ‘we have operations in the region, and so does Ascendas’ and parting ways will minimise mutual conflict of interest.
Another important reason Goodman is exiting its involvement with A-Reit’s manager is because ‘our approach is that we prefer to have full control of any Reit manager we’re involved with, and that’s not possible in this case’, Mr Goodman said.
However, the group is not bidding goodbye to the Singapore industrial property market.
‘Goodman will re-enter the Singapore market at some point. We know this market well and we like it,’ Mr Goodman said.
The group could invest in the Singapore industrial property scene again, possibly through its wholesale property funds, or development activity.
MMP – UOBKH
Unassailable frontage on Orchard Road
MacQuarie MEAG Prime (MMP) REIT invests in real estate used for retail and office purposes in Singapore and overseas. MMP REIT’s initial portfolio comprises 74.2% strata title interest in Wisma Atria (WA) and 27.2% strata title interest in Ngee Ann City (NAC). WA and NAC are landmark retail malls within the Orchard Road shopping district next to Orchard MRT station. MMP REIT is managed by MacQuarie Pacific Star Prime REIT Management, which is owned by MacQuarie Bank (50%), MEAG Munich Ergo (25%) and Investmore (25%). MacQuarie Real Estate Singapore owns 23.9% of MMP REIT.
NAC: positive impact from rent review with Toshin. MMP REIT will review rental of master lease for 226,275sf of retail space with Toshin Development, a subsidiary of Takashimaya, in Jun 08. The magnitude of rent increase is capped at 25% and we have assumed an increase of 12.5% in our forecast. MMP REIT will also reconfigure 16,780sf of space previously occupied by National Library into a beauty and wellness precinct. Management expects rental to increase from S$7.10 to S$14psf pm after reconfiguration is completed in May 08.
Benefiting from positive office rental reversion. MMP REIT owns a total of 239,972sf of office space at WA and NAC. Rentals for renewed and new leases has increased from S$7.70psf pm in 1Q07 to S$12.10psf pm in 4Q07, substantially higher than average passing rent of S$6.22psf pm in 4Q07. According to Colliers, asking rents for office space in Orchard Road were as high as S$16psf pm in 4Q07.
Riding on rapid growth in Sichuan, China. MMP REIT has acquired Renhe Spring Department Store in Chengdu, the capital city of Sichuan Province, for Rmb350m or S$70m. The mall houses premium foreign brands such as Burberry, Prada, Dunhill, Ermenegildo Zegna, Gucci and Hugo Boss. The property achieved sales of Rmb263m in 2006, an increase of 23%, and will be linked to Chengdu’s new subway system in 2010. The vendor Renhe Spring Group provided guaranteed net profit of Rmb26.4m for four years, equivalent to net distribution yield of 7.5%. MMP REIT has been granted right of first refusal for another two malls in Chengdu with total GFA of more than 1m sf.
Strategic review could result in restructuring. MacQuarie Pacific Star has embarked on a strategic review with the objective of enhancing value for all MMP REIT unitholders. The review will consider both corporate and asset level strategies and could also involve a proposal to take over 100% of MMP REIT. Management intends to refinance borrowings of S$235.8m with short-term borrowings to provide flexibility. MMP REIT has earlier established a S$2b multicurrency Medium Term Note (MTN) with tenor of one to five years.
Upgrade to BUY. We like MMP REIT for strategic frontage on Orchard Road. MMP REIT gains full year contribution from overseas investments in China and Japan in FY08. The on-going strategic review could also unlock value for investors. MMP REIT provides FY08 distribution yield of 6.56%, an attractive spread of 4.32% over 10-year Singapore government bond yield at 2.24%. Our target price is S$1.55 based on 2-stage dividend discount model (required rate of return: 7.85%, terminal growth: 2.5%).