Month: April 2008
MapleTree – BT
MapletreeLog distributable income up 37% in Q1
yesterday reported distributable income of $21 million for the first quarter ended March 31, up 37 per cent from the corresponding period last year.
This comes on the back of a 48 per cent jump in gross revenue from the year-ago period to $42.6 million.
The increase in distributable income came as MapletreeLog acquired an additional 23 properties within the past one year. As at March 31, the trust has a portfolio of 72 properties. Eight acquisitions are pending completion, which will raise the trust’s portfolio to 80 properties spread across Singapore, Malaysia, Hong Kong, Japan, China and South Korea, with a book value of more than $2.7 billion.
Unitholders will receive distribution per unit (DPU) of 1.90 cents for Q1 2008, which is 28.4 per cent higher than in the year-ago period.
MapletreeLog’s website shows analysts’ DPU forecasts for 2008, made in January, ranged from 6.70 cents to 8.01 cents.
MapletreeLog also reported an improvement in borrowing costs. Due to a sharp drop in interest rates for major currencies during the quarter, the trust’s weighted average annualised interest rate fell from 3.3 per cent per annum in the Q4 2007 to 2.9 per cent in Q1 2008.
According to Mapletree Logistics Trust Management (MLTM) CEO Chua Tiow Chye, the trust has started the year with a strong performance.
‘We will continue with our yield plus growth strategy but in the current environment, we will remain focused on optimising yield from the existing portfolio while continuing to identify selective acquisition opportunities which we can undertake when the environment normalises,’ Mr Chua said.
MapletreeLog had announced a $500 million rights issue in December last year but deferred the plan in January when the capital market softened.
On this, Mr Chua said: ‘We will continue to monitor and review when it will be conducive to re-visit an equity fund raising.’
MapletreeLog also reported a higher leverage ratio of 54.7 per cent as at March 31, up 1.3 percentage points from Dec 31 last year. This was largely due to borrowings drawn down to fund the trust’s committed acquisitions in Q1 2008.
CRCT – BT
CRCT income for distribution 8.5% higher than forecast
CAPITARETAIL China Trust (CRCT) has announced income available for distribution to unit-holders of $6.3 million for the period Feb 5 to March 31 – $0.5 million or 8.5 per cent higher than its forecast of $5.8 million.
Available distribution per unit (DPU) for the period is 1.02 cents (6.66 cents on an annualised basis), which is 8.5 per cent higher than its forecast of 0.94 cents (6.14 cents on an annualised basis). This translates to 9 per cent year-on- year DPU growth.
Based on the unit price of $1.50 on April 23, the distribution yield works out to 4.44 per cent.
CRCT explained that the last distribution was scheduled to take place in respect of its semi-annual distributable income for the period July 1 to Dec 31, 2007. ‘In order to ensure fairness to unit-holders in issue on the day immediately prior to Feb 5, 2008, the day on which the new units are issued under the equity fund-raising for the acquisition of Xizhimen Mall, the manager has made a cumulative distribution of 4.04 cents for the period July 1, 2007 to Feb 4, 2008,’ it added.
Lim Beng Chee, CEO of CRCT manager CapitaRetail China Trust Management, said: ‘Following a year of proactive asset management of our portfolio, the malls have registered robust top-line growth, with Wangjing Mall and Qibao Mall delivering a year-on-year revenue increase of 18.8 per cent and 45.6 per cent respectively. Tenants have also enjoyed remarkable sales growth, with same-store sales at Wangjing Mall, Qibao Mall and Xinwu Mall growing 30.9 per cent, 27.4 per cent and 51.8 per cent respectively.’
Gross revenue for Q1 2008 was 116.3 million yuan(S$22.5 million), representing a y-o-y increase of 29.8 million yuan or 34.4 per cent. This was mainly attributed to revenue from Xizhimen Mall, which was acquired on Feb 5, as well as occupancy growth at Wangjing Mall and Qibao Mall. Excluding Xizhimen Mall, gross revenue for Q1 2008 was 95 million yuan, a y-o-y increase of 8.5 million yuan or 9.8 per cent.
Net property income (NPI) for the quarter was 72.7 million yuan, a y-o-y increase of 18.5 million yuan or 34.2 per cent. Excluding Xizhimen Mall, NPI for the quarter was 59.2 million yuan, a y-o-y increase of 5 million yuan or 9.2 per cent.
CRCT’s unit price closed 10 cents higher at $1.60 yesterday.
FSL – OCBC
In Limbo
Good 1Q results. First Ship Lease Trust (FSLT) posted a 10% QoQ gain in 1Q revenue to US$16.6m as the trust’s November acquisitions made their first full-quarter contribution to income. It is paying out 2.59 US cents as DPU, up 7% QoQ and 21.6% over the base DPU promised at listing. We hesitate to call that a 13% return though, as a significant component of that DPU is a depreciation payout which is a return of capital rather than a return on capital. This is reflected in the 4% QoQ decline in NAV to 88 US cents thanks to FSLT’s aggressive depreciation strategy.
Acquires two crude oil tankers. FSLT also announced the acquisition of two crude oil tankers for US$140m. Bought from Turkey-based Geden Lines, the tankers will be chartered back to them for ten years, with early buyout options attached. The charter rate will be on a floating rate basis, linked to the US$ Libor, and acting as a natural hedge for FSLT’s debt. Basically, instead of the typical shipping trust M.O. of taking on a fixed charter rate and then fixing debt using an interest rate swap, FSLT has eliminated the extra swap counterparty. FSLT has said that the acquisitions will add US$0.16 to 2Q DPU and US$0.28 to every full quarter thereafter. The transaction highlights FSLT’s flexibility in moving between different shipping sub-sectors.
Half-way through 2008 target. With this transaction, FSLT has exhausted its credit facility from IPO (3-month US$ Libor + 100 bps) and moved on to its new facility (Libor + 120 bps). In terms of its acquisition target for the year, FSLT has US$160m – or to be conservative, the US$150m remaining in its debt facility – left to burn. Deal flow is not a problem as management says the credit tumult has churned up some choice acquisitions. The problem is what happens once FSLT hits the 1x debt-to-equity point. Because of its aggressive payout strategy, FSLT is on a relatively shorter leash (which we like) in terms of debt. The plan has always been to issue equity once that 1x target is hit. For now, FSLT is saying it will not issue equity at 12% yields – too dilutive. But how quickly the sector will re-rate to more attractive levels is still an unknown. For now, we’re reducing our fair value estimate to S$1.20 to reflect the weakening US dollar. We will review our ratings on the asset class as a whole after Rickmers Maritime posts its results. BUY.
MapleTree – CIMB
Respite from debt woes
• 1Q08 results in line on traditionally quiet quarter. Distribution income of S$21.0m was in line with our expectation (23% of our full-year forecast) on a traditionally quiet quarter. However, DPU of 1.9cts came in above Street (27% of full-year) and our estimates (28%) as our assumption of an increased share base from equity fund-raising this year has not yet happened. Gross revenue of S$42.6m was up 48% yoy on contributions from 23 properties acquired in 2007. This was in line with our expectation (24% of full-year) due to a traditionally quieter first quarter; contributions from new acquisitions usually come in in the second half of the year (1Q07: 21% of full-year DPU, 1Q06: 20% of full-year).
• Short-term debt refinanced, cost of debt lowered. Management announced the conversion of S$155m of borrowings due in 2008 into term loans and in-principle approval from banks to convert another S$300m. After conversion, MLT’s shortterm debt of S$476m (35% of total debt of S$1.36bn) should be reduced to 2% of its total debt. Weighted average interest rates also declined from 3.3% p.a. in 4Q07 to 2.9% p.a. in 1Q08, as interest rates for major currencies dropped sharply during the quarter. With this refinancing, Moody’s confirmed MLT’s original Baa2 rating after an earlier review for possible downgrade.
• Sale of non-core properties under consideration. As at 31 Mar 08, MLT’s asset leverage ratio was 54.7%, up slightly from 53.4% a year ago. This was largely due to borrowings drawn down to fund committed acquisitions in 1Q08. Management is considering the sale of some non-core assets to lower its gearing, which is pushing near the regulatory limit of 60%.
• Maintain Outperform and target price of S$1.36. Our DDM-derived target price (discount 6.9%) stays at S$1.36, with no changes in our estimates. Although gearing levels remain high and equity-raising looks difficult in 1H08, we draw confidence from: 1) management’s ability to refinance its significant short-term debt; 2) MLT’s quality asset portfolio; and 3) the positive outlook for the Asian logistics industry. Maintain Outperform.
FrasersCT – UOBKH
Rental Reversion Higher Than Expected
Strong rental reversion at Causeway Point. Frasers Centrepoint Trust (FCT) reported strong rental reversion for Causeway Point in its 2QFY08 results. Revenue contribution from its largest mall Causeway Point gained 11% yoy to S$14.6m, benefitting from strong rental reversion and higher turnover rent. 20,816sf of retail space at Causeway Point representing 5% of total net lettable area (NLA) was renewed at 16% above preceding rental rates in 2QFY08. FCT has also increased the number of leases with turnover rents from 16% in 2QFY07 to 62% in 2QFY08. Stronger performance at Causeway Point has offset lower occupancy at Northpoint due to ongoing asset enhancement initiative (AEI), helping FCT generate 10.3% yoy increase in revenue to S$21.6m and a 16.8% yoy increase in distributable income to S$12m in 2QFY08.
Ready pipeline of acquisitions. FCT has a ready pipeline of acquisitions that will double NLA to more than 1.2m sf when fully completed. It has entered into a put and call option agreement with sponsor Frasers Centrepoint Limited for the purchase of Northpoint 2 at between S$139.5m and S$170.5m. Northpoint 2 is 70% completed and is expected to obtain a temporary occupation permit by Aug 08. 68% of the NLA has been committed and Northpoint 2 is on schedule to be injected into FCT in 1QFY09. We expect YewTee Point and Bedok Mall with NLA of 80,000sf each to be injected in 3QFY09 and 2QFY11 respectively. We estimate the three new malls to contribute 28.6% of total revenue in FY12.
Upgrade to BUY. FCT focuses on suburban retail malls, which provide defensive qualities. We have raised our FY08 DPU forecast by 15% to 7.7 cents to factor in strong rental reversion from Causeway Point. FCT provides FY08 distribution yield of 6.4%. Our target price for FCT is S$1.66 based on the two-stage dividend discount model. We have upgraded our recommendation from HOLD to BUY as our new target price provides upside of 37.2%.