Month: October 2008
LMIR – OCBC
Pays out 1.6 S cents for 3Q
Pays out 1.6 S cents. Lippo-Mapletree Indonesia Retail Trust (LMIR) posted S$26.6m in gross revenue in 3Q08, up 8.4% QoQ. Revenue was also 27% higher than guided at LMIR’s IPO last year; primarily due to contributions from post-IPO acquisition Sun Plaza. LMIR’s net property income of S$25m was also 27% higher than the trust’s guidance. However, 3Q profit after tax of S$6.6m was 55% lower than guided because of unrealized losses on both foreign exchange forward contracts and interest rate swaps. Distributable income was up 7% QoQ and 11% higher than LMIR’s guidance. The results were generally in line with our expectations. As of 3Q, LMIR has a very low leverage level of about 9% with no refinancing risk until 2013. The trust will pay out 1.6 S cents for the quarter (35% annualized yield).
Share price down 69%. Since our last report in July, LMIR’s share price has fallen 69% to 18.5 S cents. In contrast, the FTSE S-REIT index has fallen about 50% over the same period. Current price levels also mark a 77% decline from LMIR’s 80 S cents IPO price (November 2007). We think the biggest factor behind the decline has been currency movements against a backdrop of extreme risk aversion. The Indonesian Rupiah (IDR) has devalued about 12% against the Singapore dollar since January, with the biggest spike in the past month itself. Meanwhile, forward rates (Bloomberg) are pricing in exchange rates not seen since the Asian Financial Crisis.
DPU protected, but not NAV. The continued forex volatility should be of limited concern to LMIR investors focused on income, as the trust has hedged both its SGD-denominated distributions and interest expense (debt is SGD-denominated). While SGD-IDR volatility will not threaten investor income, it could affect NAV. LMIR is currently trading at a very low P/Book ratio of 0.2x (based on historical values), but these asset values do not reflect current exchange rates. Investors could see asset values falling in SGD terms and this may also affect gearing levels.
Maintain BUY. We have tried to incorporate these concerns into our valuation. At the same time, we think the retail story in Indonesia is still compelling. The country’s domestic economy has been relatively insulated from recent troubles, especially as the threat of inflation subsides. We take a more cautious view on our assumptions on rental growth, discount rate, and cap rates. Our new fair value estimate is 27 S cents (previously 70 S cents). Maintain BUY.
MP REIT – BT
YTL snaps up interest in Macquarie Reit for $285m
Price is 52% above its last traded price, but 49% discount to net asset value
Malaysian conglomerate YTL Corp yesterday took over the Macquarie Group’s entire interest in Singapore-listed Macquarie Prime Reit in an all-cash deal worth $285 million.
YTL said it was paying 82 cents a unit for 247.1 million units in the Reit, about 26 per cent of the total, valuing the stake at $202.6 million.
The price is a 49 per cent discount to Macquarie Prime Reit’s net asset value, and a 52 per cent premium over its last traded price on Friday of 54 cents. Trading in Macquarie Prime was halted yesterday for the announcement.
The remaining $80 million is for Macquarie’s 50 per cent stake in the Reit manager, which will allow YTL to control the Reit, YTL Group managing director Francis Yeoh told reporters here yesterday.
Noting that the deal provides a 2009 yield of about 9.4 per cent, based on Bloomberg consensus estimates, Mr Yeoh said it offers ‘very compelling returns in Singapore dollar terms’ and illustrates his optimism about the Singapore property space.
The Reit currently owns $2.2 billion of retail and office properties in Singapore, Japan and China. It has stakes in Wisma Atria and Ngee Ann City along Orchard Road.
YTL is separately developing two luxury villas on Sentosa Island and last year bought the prime Westwood Apartments site at Orchard Boulevard for $435 million.
‘I’m very confident Singapore will pull through this little turbulence… Even if they have a crisis they will always come out ahead of the curve,’ he said. Mr Yeoh will be appointed the Reit manager’s executive chairman once the deal is completed.
Mr Yeoh said Macquarie Prime will be rebranded Starhill Global Reit and will be YTL’s main vehicle for strategically acquiring yield accretive prime retail space in Asia and the West. He added he will be working with principals in the fashion, food and watch and jewellery industries to boost yields in its luxury malls.
Keith Magnus, Merrill Lynch’s head for Singapore and Malaysia investment banking and YTL’s strategic adviser for the transaction, said: ‘Challenging equity and debt conditions on account of the sub-prime crisis and tightening credit market conditions have led to attractive valuations.’
In February this year, Macquarie Prime, then known as Macquarie MEAG Prime Reit, said it was undergoing strategic review that could see the Macquarie Group selling its stake in the Reit. It is said to have received more than 20 expressions of interest from unnamed parties.
In May, MEAG Munich Ergo AssetManagement sold its 25 per cent stake in the Reit’s manager to Singapore-based fund management company Pacific Star. The deal left Pacific Star and the Macquarie Group each with an equal share of the Reit manager. Macquarie’s 50 per cent stake has now been bought by YTL.
The YTL Group already controls Bursa Malaysia-listed Starhill Reit, the country’s largest Reit with four properties in Kuala Lumpur valued at about US$430 million. Mr Yeoh did not rule out any merger of the two Starhill Reits, saying that ‘as long as there is equitable interest for all, we will do it.’
MP REIT – SGX
HIGHLIGHTS
• 3Q 2008 DPU of 1.78 cents achieved, 15.6% higher than 3Q 2007
• Singapore properties continue to demonstrate strong performance
• S$220 million of loans refinanced during the quarter at competitive rates
• Strategic review concluded; to assess and implement new strategic initiatives with new sponsor, YTL Corp
More detail, click here
CDLHT – BT
CDL Hospitality Trusts (CDLHT) on Thursday said that its third quarter distributable income rose 29.7 per cent to S$24.4 million, up from S$18.8 million a year ago.
Distribution per unit for 3Q 2008 was 2.93 Singapore cents, 24.2 per cent higher than the 2.36 Singapore cents reported for the same period last year. Net property income for the three months ended September 30, 2008 rose 21.3 per cent to S$27.3 million, from S$22.6 million in 3Q 2007.
The trust, which is Singapore’s only real estate investment trust (Reit) based on hotel properties, said that room revenue per available room (RevPAR) rose to $214 in Q3 2008, from $176 a year ago.
‘We are pleased to have been able to report robust growth in this quarter on the base of organic growth across CDLHT’s portfolio of hotels despite turmoil in the global financial markets,’ said Vincent Yeo, chief executive of the Reit’s manager.
‘Looking ahead over the short term, the events of the last few months will have some impact on our business, but steps have been taken to protect the profitability of CDL HT,’ he said. ‘The Reit remains positive of the general outlook over the medium and long term.’
MP REIT – BT
YTL buys 26% of Macquarie Prime Reit
Malaysia’s YTL Corp Bhd on Tuesday bought Macquarie Bank’s 26 per cent stake in Singapore-listed Macquarie Prime Reit for $202.6 million, a 49 per cent discount to the Reit’s net asset value.
The deal, which works out to 82 cents per unit, is at a 17 per cent premium over its 30 day volume weighted average price and 52 per cent over its last traded price.
YTL also bought over Macquarie Bank’s 50 per cent share in Prime Reit Management Holdings, the reit manager and with its stake in the Reit, will be able to control operations. The all-cash deal is valued at a total of $285 million.