Month: October 2008
First Reit – BT
FIRST Real Estate Investment Trust (First Reit) yesterday reported net distributable income of $5.3 million for the third quarter ended Sept 30, 2008 – 12.4 per cent more than a year ago.
This was driven by a 7.4 per cent year-on-year hike in gross revenue to $7.6 million in Q308. Higher rentals from four Indonesian properties acquired in 2006 and rentals from another four local properties bought last year contributed to the revenue increase.
To be paid out on Nov 28, distribution per unit (DPU) for the healthcare trust in Q308 was 1.92 cents, 0.2 cent more than in the same period last year. This translates to an annualised DPU of 7.60 cents. Based on the closing price of 39.5 cents on Oct 17, the distribution yield stands at 19.2 per cent.
‘In today’s challenging economic environment around the world, we remain optimistic that the demand for quality healthcare will continue to grow,’ said Ronnie Tan, CEO of First Reit manager Bowsprit Capital Corporation Ltd.
‘Healthcare tends to be a resilient sector – everyone still has to look after his health in good or bad times. Moreover, the aging population and its related diseases will continue to provide opportunities for healthcare services.’
First Reit’s portfolio comprises eight properties in Singapore and Indonesia. According to the trust, revenues are derived from long- term leases which are denominated in Singapore dollars and have no provision for downward rental revisions.
Looking ahead, First Reit said that it will focus on improving the income-generating capacity of its existing healthcare properties. It will enhance assets and work with tenants to continually upgrade healthcare services.
While the trust continues to have headroom for more acquisitions (with debt-to-property valuation ratio standing at 15.6 per cent), Dr Tan said: ‘We will continue to exercise prudence in assessing the attractiveness, timing and sequence of future acquisitions.’
The manager expects First Reit to continue performing well for the rest of the financial year. The trust’s unit price ended 1.5 cents higher yesterday at 41.5 cents.
MapleTree – BT
MapletreeLog slashes leverage ratio to 36.9%
MAPLETREE Logistics Trust (MapletreeLog) cut its leverage ratio to 36.9 per cent in the third quarter of this year – down significantly from 56.3 per cent in Q2.
At Sept 30, its debt was down about 30 per cent – from $1.461 billion in the previous quarter – to $1.023 billion, with the help of a rights issue in July.
However, this had a dilution effect on its distribution per unit (DPU).
For Q3, MapletreeLog reported DPU of 1.84 cents, down 9.8 per cent quarter on quarter but up 7 per cent year on year.
Distributable income of $25.4 million was 33.1 per cent higher than a year earlier, while net property income was up 18.7 per cent to $40.2 million.
At the close of the rights issue offer period, only 59.9 per cent of valid acceptances were received. MapletreeLog’s sponsor Mapletree Investments took up the balance of the units and applied for excess rights, lifting the final demand tally to 130.7 per cent.
The rights issue, which was completed on Aug 22, saw 831.1 million new units issued, increasing the number of outstanding units from 1.108 billion to 1.939 billion. MapletreeLog raised $606.7 million from the issue – and used a significant portion to repay loans.
Of its current debt of $1.023 billion, $114 million is due to mature within 12 months. ‘We are comfortable with this,’ said Chua Tiow Chye, the chief executive of Reit manager Mapletree Logistics Trust Management.
Mr Chua also said the trust has committed bank lines and firm proposals that are twice the amount, as well as other uncommitted lines.
‘We are well positioned to weather the current challenging environment as there is no funding or refinancing risk,’ he said.
Weathering the ‘challenging environment’ means MapletreeLog will get off the acquisition trail for a while, especially as it would like to maintain a leverage ratio of 40-45 per cent.
It has announced two acquisitions with a book value of $46 million that are pending completion.
Mr Chua said that looking forward, growth will be at a more moderate pace of 3 per cent. ‘If we do acquisitions, it will be based on debt and equity,’ he said.
MapletreeLog’s less aggressive stance will also extend to its tenants. ‘With the downturn, we need to be more circumspect on how much we can push tenants on rental reversion,’ Mr Chua said, adding that the trust will look instead at ‘rental retention’.
Expenses increased 26.4 per cent year on year to $5.8 million in Q3, due to higher property taxes and land rents.
Still, rental reversion was about 30 per cent higher. The trust’s portfolio of 79 buildings, valued at $2.485 billion, also had an occupancy rate of 99 per cent.
MI-REIT – BT
By EMILYN YAP
SINGAPORE – Three property and infrastructure funds issued statements on Wednesday in a bid to reassure investors of their financial positions.
The Macquarie International Infrastructure Fund Limited (MIIF) said that its businesses are performing strongly in line with management’s expectations.
The fund revealed that it has no bilateral dealings with known troubled financial institutions, and the earliest maturity date for borrowings held by underlying businesses stands at 2011.
Facing a possible rating downgrade by Moody’s, MacarthurCook Industrial Reit (MI-Reit) said that its income is secured by a long lease expiry profile, head lease arrangements and quality and diversified tenants.
MI-Reit added that it is in negotiations to refinance debt maturing in April 2009. Negotiations should be finalised in January next year.
The MacarthurCook Property Securities Fund also highlighted its commitment to further reduce debt and prudently manage its underlying portfolios.
FSL – BT
FSL Trust sees steady revenue with long leases
CHARTER lease provider First Ship Lease (FSL) Trust said yesterday that investors have little cause for worry as its charter leases are long-term, which should result in steady revenue. But it plans to scale back acquisitions as the shipping industry navigates choppy waters.
‘While shipping cycles do affect our lessors, our strength is that our charters are long-term and fixed,’ said CFO Cheong Chee Tham. ‘We give investors exposure to the maritime industry with reduced risk.’ Lessors with strong credit ratings will be able to ride through the current storm, he said.
FSL Trust has a portfolio of 23 vessels that are leased out on for terms of at least seven years. The earliest expiry for one of its contracts is 2014. FSL also highlighted that as at Sept 30, it had no loan maturity for three years.
The trust is also unlikely to make any acquisitions between now and mid-2009, and plans to focus on sustaining its distribution per unit (DPU). DPU for the third quarter ended Sept 30 was 3.05 US cents. DPU guidance for Q4 is 3.08 US cents, revised down from 3.11 US cents earlier this month. This is because FSL Trust’s lending banks invoked a ‘market disruption clause’ in loan terms, which has led to higher interest charges.
FSL Trust is ‘optimistic’ its banks will not invoke this clause again when interest rates are reset around end-December and early January, since the gap between interbank funding and the London Interbank Offer Rate (Libor) has narrowed. DPU guidance for Q1 2009 is now 3.17 US cents. Unitholders will be paid the Q3 2008 DPU on Nov 28. Q3 revenue grew 84.8 per cent to US$23.69 million, while net distributable income was 42.2 per cent higher at US$15.8 million, of which US$551,000 was payable as an incentive fee to the trustee-manager.
FSL Trust’s unit price closed five cents higher at 48 Singapore cents yesterday.
CMT – BT
CMT puts works at three malls on hold
Trust’s fundamentals strong, rents not likely to bottom out
CAPITAMALL Trust (CMT) yesterday said that it will put upgrading plans for some of its properties on hold because of high construction costs.
Singapore’s biggest property trust also said that its third-quarter distributable income rose 14.2 per cent to $60.8 million, from $53.2 million a year earlier, as contributions kicked in from new acquisition The Atrium. Q3 distribution per unit (DPU) rose to 3.64 cents a share, from 3.4 cents a year earlier. Net property income rose 13.1 per cent to $86.9 million, from $76.8 million in Q3 2007.
The earnings were in line with expectations, analysts said. The news pushed CMT shares to their highest level in more than two weeks. The stock rose as much as 16 cents or 7.8 per cent to $2.21 before ending the day at $2.11.
Looking ahead, CMT will be cautious, will review new commitments carefully and will not sacrifice liquidity for new projects, said Lim Beng Chee, chief executive-designate of the trust’s manager. For now, enhancement programmes that have not started at three malls – Funan DigitaLife Mall, Tampines Mall and Jurong Entertainment Centre (JEC) – have been put off. Works at JEC were projected to cost about $170 million.
The trust’s fundamentals are strong as rents are not expected to bottom out in the next few quarters, said Pua Seck Guan, CMT’s outgoing chief executive. So far this year, CMT has renewed 289 leases – which make up 15.4 per cent of total net lettable area – at a 9.3 per cent increase to preceding rental rates. There is also a $12.2 million projected increase in net property income from ongoing asset enhancement works.
Analysts agreed with Mr Pua. Singapore’s retail sector remains resilient, as evidenced by CMT’s latest results, Macquarie Research Equities analysts said in a note yesterday. ‘CMT remains one of our top Singapore Reit (real estate investment trust) picks, with growth from active leasing, asset enhancements and acquisitions,’ it said. Citigroup also issued a ‘buy’ call on CMT, citing its steady income stream.
CMT has already secured refinancing for $187.5 million and $80 million of loans due in December 2008 and May 2009 respectively and is in the midst of negotiating refinancing for $673.7 million due in August 2009. Both the trust and analysts are confident funding will be secured.
‘CMT exists within the enlarged CapitaLand group, and the group as a whole is well supported by local and foreign banks,’ said UOB Kay Hian analyst Jonathan Koh. Earlier this month, CapitaLand said that with its various listed entities, it has raised more than $5 billion of debt year-to-date. In May this year, the trust raised its target asset size to $9 billion by 2010, from an earlier forecast of $8 billion. CMT agreed in May to buy The Atrium along the Orchard Road shopping belt for $839.8 million, boosting its assets to $7.2 billion at June 30.
Yesterday also marked Mr Pua’s last results briefing at CMT’s helm. He quit in September to pursue personal interests. His resignation is a ‘big loss’ and could threaten the group’s ability to grow in the longer term by acquiring under-utilised assets, said Citigroup analyst Wendy Koh. ‘However, his departure is unlikely to affect the rental income stream from existing portfolio and major asset enhancement pipeline for existing properties,’ she added.
Mr Lim acknowledged that Mr Pua has left ‘big shoes’ to fill, but is confident that the management team can fill them.