Month: March 2008
CCT – UOBKH
CCT obtained option to acquire One George Street from CapitaLand
Call option to acquire One George Street. CapitaCommercial Trust (CCT) has obtained call option with the right but not obligation to purchase One George Street from CapitaLand at price of S$1.165b or S$2,600psf. One George Street is a 99-year leasehold Grade A office building with net lettable area of 447,999sf (97.2% office, balance retail). It is located within the Central Business District and walking distance to Raffles Place and Clarke Quay MRT stations. Key tenants at One George Street are Royal Bank of Scotland, WongPartnership, Borouge, Lloyd’s London (Asia) and Canadian High Commission.
Structured with 5-year yield protection. CapitaLand will provide yield protection to CCT to ensure minimum net property income of S$49.5m/year (yield of 4.25%) for five years from the date of completion of acquisition till 2013. The yield protection provides insurance against downside risk. We estimated the yield protection to be equivalent to rental of S$11.44psf pm plus other income of S$0.28m/month. Occupancy at One George Street is 100%. According to management, about 50% of the leases are up for renewal in 2008 and 2009. Current asking price for rental at One George Street is S$19psf pm.
CapitaCommercial Trust (BUY/S$2.11/Target: S$2.56)
Already secured committed funding. CCT has already secured committed funding from banks to finance the acquisition. There will not be any equity issue in the form of a placement or rights issue. CCT’s current gearing is low at 24.6%. Gearing is estimated to increase to 40.8% post acquisition of One George Street. CCT has recently secured attractive interest rate at 3.05% for 2-year S$150m medium term note (MTM) and 3.15% for S$100m 3-year MTM. The acquisition of One George Street is expected to complete by Jul 08.
Benefitting from positive rental reversion. CCT is well positioned to benefit from positive rental reversion as 56.9% of its leases for office space are up for renewal in 2008 and 2009, when supply of office space coming on stream is fairly limited. According to management, CCT’s current asking price is S$22.50psf pm for 6 Battery Road and S$17.50psf pm for Raffles City Tower, which is slightly higher compared to 4Q07.
Raise target price to S$2.56. Our target price for CCT is S$2.63 if we assumed acquisition of One George Street is completed in Jun 08. This assumes cost of debt for additional borrowings at 3.5% and contribution from One George Street starting 3Q08. We have assigned a probability of 50% with regards to completion of the acquisition and have, therefore, raised our target price for CCT from S$2.45 to S$2.56.
KREIT – SGX
ANNOUNCEMENT OF RIGHTS ISSUE PRICE
K-REIT Asia Management Limited, as manager of K-REIT Asia (the “Manager”), wishes to announce that the issue price per unit in K-REIT Asia (“Rights Unit”) under the Rights Issue described in the circular to unitholders of K-REIT Asia (“Unitholders”) dated 13 March 2008 (“Unitholders’ Circular”) will be $1.39 per Rights Unit (the “Rights Issue Price”). The Rights Issue Price is at a discount of 8.3% to the Prevailing Market Price described in the Unitholders’ Circular, being the volume-weighted average traded price for a unit in K-REIT Asia (“Unit”) for all trades on Singapore Exchange Securities Trading Limited (the “SGX-ST”) in the ordinary course of trading on the SGX-ST for a period of three business days immediately preceding 28 March 2008.
Based on the total of number of Rights Units of 396,925,192 as stated in the announcement dated 24 March 2008, the gross proceeds pursuant to the Rights Issue will be approximately $551.7 million. As a result of applying the net proceeds of the Rights Issue (after deducting estimated costs and expenses associated with the Rights Issue) towards partially refinancing the Bridging Loan as defined in the Unitholders’ Circular, K-REIT Asia’s aggregate leverage will be 27.7% upon the completion of the Rights Issue.
Source : SGX
AREIT – SGX
COMPLETION OF THE ACQUISITION OF GOODMAN’S STAKE IN ASCENDASMGM FUNDS MANAGEMENT LIMITED AND UNITS IN A-REIT
The Board of Directors of Ascendas-MGM Funds Management Limited (“AMFML”), as manager of Ascendas Real Estate Investment Trust (“A-REIT”, and manager of A-REIT, the “Manager”) wishes to announce that Ascendas Investment Pte Ltd, a wholly-owned subsidiary of Ascendas Pte Ltd, had on 26 March 2008, completed its acquisition of 40% interest in the Manager comprising 400,000 ordinary shares in the ordinary share capital of the Manager from Goodman Singapore Industrial Management (Aust) Pty Limited (“Goodman”).
At the same time, Ascendas Land (Singapore) Pte Ltd (“ALSPL”), has completed the acquisition of 83,241,801 units in A-REIT (“Units”), representing 6.28% of the total issued Units (the “A-REIT Sale Units”) from Goodman Singapore Pte Limited (“GSPL”).
Following the completion, AMFML is now a wholly-owned subsidiary of Ascendas Investment Pte Ltd and an indirect wholly-owned subsidiary of Ascendas Pte Ltd and Jurong Town Corporation; and it has been renamed as Ascendas Funds Management (S) Limited.
Further, following the completion, Mr Gregory Leith Goodman, Mr James Hodgkinson and Dr Peter Dodd have relinquished their directorships in AMFML. The Board of the Manager now comprises:
Mr Lew Syn Pau (Chairman of the Board)
Mr David Wong (Audit Committee Chairman)
Mr Benedict Kwek (Audit Committee Member)
Mr Swee Kee Siong (Non-Executive Director)
Ms Chong Siak Ching (Non-Executive Director)
Source : SGX
AllCo – BT
Debt reprieve for Allco Reit – but at a much higher cost
Market cheers news the firm has secured extension of loans
Allco Commercial Real Estate Investment Trust (Allco Reit) earned a reprieve in its debt repayment obligations last week – but at a much higher cost.
Allco (Singapore) Limited, the manager of Allco Reit, had announced last Thursday that the trust had received in-principle approval to extend the due date of S$550 million in debt from July 31, 2008 to Dec 31, 2009. It had not detailed the terms and conditions of the extension, saying only that it was currently reviewing them.
When asked by BT yesterday about the terms of the refinancing, Nicholas McGrath – CEO and managing director of Allco (Singapore) Limited – did reveal that, while the terms were largely the same, the refinancing was ‘a lot more expensive’.
He declined to state the exact quantum of the increase in the cost of refinancing, that is the change in interest rate charged by creditors for the extension of the loan – explaining that such matters are confidential.
Refinancing of loans is typically a pricier matter for most debtors, with creditors choosing to charge more for the extension or relief in debt obligations.
Mr McGrath could, however, reveal to BT the blended margins for Allco Reit’s total debt obligations. The trust currently has S$620 million in Sing-dollar debt and another S$260 million in debt denominated in Japanese yen. The blended interest rate for its total is 3.8 per cent for 2008 and 3.95 per cent for 2009 – with the interest rate being higher for the Sing-dollar debt than the Japanese-yen portion.
‘But the margins are still lower than what our properties are yielding,’ Mr McGrath explained.
Allco Reit’s key properties include China Square Central and 55 Market Street in Singapore, and Central Park in Perth, Australia.
S$70 million of its Sing-dollar debt will mature in November 2008, which Allco Reit will repay in full with the proceeds from the sale of the assets of Allco Wholesale Property Fund. The rest of its debt obligations are long-term ones.
Mr McGrath also told BT that the trust intends to decrease its leverage over the next 12 months – from 43 per cent currently, to about 30 per cent in a year’s time.
Allco Reit’s debt repayment concerns had been the subject of a fierce legal tussle last week. The trust had sought a court injunction to head off a credit ratings downgrade by Moody’s Investors Service, concerned that the downgrade would hurt its attempts to refinance its debt. But Moody’s had battled the injunction, saying it should not be stopped from going ahead with its independent credit reviews.
The injunction was set aside by the High Court last week, and Moody’s had gone ahead with the ratings downgrade – lowering the trust’s corporate family rating to ‘Ba2’ from ‘Ba1’ and retaining the ratings on review for further possible downgrade.
Despite the downgrade, Allco Reit still succeeded in refinancing its debt – announcing a day after Moody’s ratings revision that it had managed to secure an extension of its loan obligations.
And the market has reacted favourably to Allco Reit’s announcement, with its share price having climbed steadily since. Allco Reit shares closed at 80.5 cents yesterday – up 11 per cent from its close of 72.5 cent last Thursday, after the ratings downgrade.