Month: July 2008
FCT – BT
FCT distributable income rises 19% in Q3
Gross revenue up 10% to $20.8m; DPU rises to 1.88 cents
FRASERS Centrepoint Trust (FCT) yesterday reported distributable income of $12.2 million for the third quarter ended June 30, 2008 – an increase of 19 per cent from the year-ago period.
This came on the back of a 10 per cent growth in gross revenue from Q3 2007 to $20.8 million.
Higher portfolio occupancy, strong rental renewals at Causeway Point, and better performance from the post-revamp Anchorpoint drove gross revenue increase.
Distribution per unit (DPU) for the quarter stood at 1.88 cents, 13 per cent higher than in the same period last year.
‘Strong organic growth coupled with the successful revamp of Anchorpoint delivered record distributable income to FCT unitholders for the second consecutive quarter,’ said Christopher Tang, CEO of FCT manager Frasers Centrepoint Asset Management Ltd.
With the completion of enhancement work at Anchorpoint, overall portfolio occupancy improved 2.8 percentage points from a year ago to 95.7 per cent as at June 30.
Anchorpoint enjoyed close to full occupancy and rents rose over 40 per cent, resulting in its gross revenue more than trebling to $1.7 million in Q3.
At Causeway Point, renewed rentals in Q3 2008 were 17 per cent above preceding rates.
‘Unitholders can also look forward to benefiting from the current enhancement work to Northpoint which remains on schedule for completion in June 2009,’ said Mr Tang.
As for Northpoint 2, construction is on schedule and work is in the final stages of completion.
The property is expected to obtain Temporary Occupation Permit by Q4 2008, and could be injected into FCT by the fourth calendar quarter this year or the first calendar quarter next year.
According to FCT, demand for Northpoint 2 is strong and almost all of its net lettable area has been leased or tagged in advanced stages of negotiations.
FCT has a gearing of 29.5 per cent and an A3 corporate rating from Moody’s.
‘Barring any unforeseen circumstances, the manager of FCT expects FCT to benefit from the rental renewals and the proactive asset management activities planned for the rest of the financial year ending 30 September, 2008,’ the trust’s financial statement said.
FCT’s units closed unchanged at $1.15 yesterday.
CCT – BT
CCT open to sale of Market Street Car Park
Reit reports 23% rise in Q2 distributable income to $36m
CAPITACOMMERCIAL Trust (CCT) says it is ‘open to all options’ when it comes to plans for Market Street Car Park (MSCP), and these include selling the site.
The update was given at CCT’s results briefing yesterday. Supported by strong rental reversions, the trust reported distributable income of $36.06 million for the second quarter ended June 30, 2008, up 23.2 per cent from the same period last year. Q2’s distribution per unit (DPU) of 2.6 cents is 22.6 per cent higher than in Q2 2007.
CCT has obtained outline planning permission from the Urban Redevelopment Authority to redevelop MSCP into an office tower for $1 billion to $1.5 billion.
In April, CCT manager CapitaCommercial Trust Management Limited (CTML) said that it was evaluating the project’s financial viability and funding structure, and would not decide on redevelopment anytime before mid-2009. It cited the project’s size, rising construction costs, financial market volatility and the uncertain development premium as reasons for the deferment.
Responding to a query on whether CCT would consider selling MSCP instead, CTML’s chief executive Lynette Leong said: ‘We are open to all options.’
According to her, the development premium remains uncertain, and construction costs are still rising.
Ms Leong pointed out that the redevelopment decision may still be subject to unitholders’ approval. Even if they were to reject the proposal, MSCP’s value has risen because of its redevelopment potential. ‘If it makes sense to sell it, why not? We will not rule out that option,’ she said.
For H1 2008, CCT’s distributable income of $71.92 million also outperformed the year-ago period’s by 22.9 per cent. This translates to a DPU of 5.19 cents, which is 22.7 per cent more than in H1 2007 and exceeds the manager’s forecast by 4.2 per cent.
The annualised H1 2008 DPU of 10.44 cents represents a distribution yield of 5.5 per cent based on Tuesday’s closing unit price of $1.91.
‘The outstanding numbers were largely driven by strong organic growth due to the prime quality of our assets augmented by our proactive leasing and the high standard of our property management,’ said Ms Leong.
Lease renewals and new leases contracted in H1 2008 for CCT’s office space registered an average rental rate increase of 193 per cent over last contracted rates, and there is still potential upside. ‘Many of our expiring leases have rentals that are significantly below market and are being reviewed to market as they renew,’ she said.
CCT’s gearing ratio as at July 11 was 35.7 per cent, and this took into account the acquisition of 1 George Street. The property will contribute to CCT’s income from Q3 2008, and brings its asset size close to $7 billion today.
In its latest asset valuation exercise, CCT’s portfolio as at June 1 stood at $5.57 billion, about $463 million higher than at Dec 1, 2007. The portfolio comprised CCT’s existing properties, its 60 per cent interest in Raffles City through RCS Trust, and excludes 1 George Street.
‘Given Singapore’s attractiveness as a global city and tight office supply, we are confident of exceeding our forecast DPU of 10.61 cents for the financial year ending 2008,’ said CTML’s chairman Richard Hale.
CCT will continue to seek quality and yield accretive assets, though at a more deliberate pace, given the current market environment.
CCT units rose 3.7 per cent or seven cents yesterday to close at $1.98.
a-iTrust – BT
Ascendas India Trust Q1 distributable income up 12%
ASCENDAS India Trust has reported distributable income of $12.4 million for its first quarter ended June 30, 2008, up 12 per cent from a year ago.
This translates into a distribution per unit (DPU) of 1.65 cents for the quarter, which represented an annualised yield of 8.3 per cent over the closing price of 79.5 cents of the units on July 22, 2008.
Total property income was $28.6 million, which is 23 per cent higher than the year-ago period. Net property income was $16.0 million or 20 per cent higher.
The trust said demand for its portfolio of 4.7 million sq ft of space, and hence its income stream, remained stable. The two buildings which were completed in the last half year have contributed to the bottom line, and will continue to do so as the building operations stabilise and margins further improve.
It said its high quality IT Parks continue to enjoy rental growth and high occupancy, and are well placed to weather market uncertainties due to a diversified and well-constructed income stream.
FrasersCT – DBS
Turning in a good performance
Story: FCT reported Q3 distribution income of $12.2m (+19% yoy), bringing 9M contributions to $35.4m or 80% of our full year projections. This was achieved on a 10% hike in revenue to $20.8m. Management indicated it would distribute 95% of Q3 income or $11.6m (DPU: 1.88cts). However, it is committed to distribute 100% of its earnings for the full year. The better performance was largely driven by higher contributions from Anchorpoint and positive rental reversions at Causeway Point (CP). An estimated 43% of NLA at CP was renewed at 14% above preceding levels. This more than offset the income vacuum from Northpoint as occupancies declined to 83% during this AEI period.
Point: Looking ahead, DPU is expected to be underpinned by organic and acquisition growths. It has 31% of portfolio NLA to be reviewed in FY09. In addition, progressive roll out of the $38.6m AEI at Northpoint should boost NPI by $3.7m pa (+7%) when completed in 3Q09. Meanwhile, acquisition pipeline is on track with Northpoint II scheduled to TOP by Aug 08 and injected in late 08/early 09. This mall is 96% pre-committed and should be accretive to earnings when purchased. Other properties such as Yew Tee Mall and Bedok Mall are expected to be included in 1H09 and 2010/11 respectively. We expect the group to tap debt and capital markets for these purchases. Given its current gearing of 29.5% as at 2Q08, which would enable it to improve its asset size and stock liquidity.
Relevance: We have raised our FY08 and FY09 DPU marginally to 7.2cts and 7.8cts to reflect the better rental rates. At the present level, the stock is offering 6.3% and 6.8% yield. Our price target of $1.34, based of risk free rate assumption of 3.9%, offers 17% upside.
MapleTree – DBS
Sterling Results
Story: MLT posted a set of sterling 2Q08 results, with topline and NPI rising c28% yoy and c3% sequentially to $43.8m and $38.3m respectively, in line with expectations. Distributable income rose a better 7.6% qoq to $22.6m (DPU: 2.04cts), helped by lower interest expense as effective borrowing cost dipped to 2.7% from 2.9% a quarter ago. The better performance was primarily due to contributions from 18 additional properties while organic rental improvement from assets in HK and Singapore also shored up bottomline.
Point: Going forward, MLT’s regional yield plus growth strategy is still intact. While acquisition pace may moderate due to a quieter property market, this is likely offset by higher total return benchmarks set for new acquisitions. Positive rental reversions from its HK and Singapore assets and asset enhancement initiatives should also boost bottomline. Shareholders approved a 3-for-4 rights issue at $0.73 apiece to raise $607m to partially fund new purchases and pare down debt. This will lower gearing to 38%, giving it room to tap new sponsor and third party purchases. Post-rights, it has $330-$640m of debt headroom for new buys, assuming a debt/asset ratio of 45-50%.
Relevance: We remain positive on MLT’s prospects in the medium term with a strengthened balance sheet, which gives it room to tap new opportunities for growth. While short-term share price performance may be dampened by DPU dilution in 2H08 and potential overhang from the new unit issue, we believe this has been largely reflected in the share price. The stock is currently trading at 8.1-9.0% yield based on post-rights FY08 and FY09 DPU of 6.7cts and 6cts. Our adjusted price target of $1.04, assumes $550m of new acquisitions in FY09.