Month: November 2008
CCT – BT
CCT shares fall on refinancing jitters
Market nervous over loans that are yet to be confirmed, analysts say
SHARES of CapitaCommercial Trust (CCT) fell as much as 11.9 per cent yesterday after it said that it was pursuing its refinancing needs with several institutions.
‘As and when the refinancing is finalised, the necessary announcements will be made,’ the real estate investment trust (Reit) said in a statement to the Singapore Exchange after the market closed last Friday. CCT was responding to a news report that said it had verbally mandated four banks to handle a $580 million three-year refinancing exercise.
CCT shares fell to as low as 70 cents yesterday before ending 6.5 cents down at a one-year low of 73 cents.
Analysts said that the shares took a beating because market was jittery that the loans had not been confirmed.
‘It’s just reaction to Friday’s announcement,’ said one analyst.
Concerns remain over many Singapore-listed Reits’ access to credit and ability to refinance borrowings at competitive rates.
‘The area of focus for S-Reits over the next 12-15 months would remain refinancing issues, with a third of the total $15.6 billion worth of indebtedness due to be rolled over during this period,’ DBS Group Research analyst Janice Chua in a note yesterday.
On Friday, Frasers Commercial Trust (FCOT) said that it took a $70 million loan from parent company Fraser and Neave to repay a loan due the next day. FCOT is now in discussions to refinance the $70 million loan and all debt maturing next year.
In response, Standard & Poor’s Ratings Services yesterday took the trust off ‘CreditWatch’ status and said that the outlook is stable.
‘The stable outlook factors in Standard & Poor’s expectation of FCOT putting in place committed refinancing arrangements for the $550 million debts by March 31, 2009,’ S&P said. ‘The rating may be placed on CreditWatch negative or lowered if this is not in place. A rating upgrade has become more challenging for FCOT, given that refinancing costs are expected to be higher and that access to equity has declined due to the volatile financial market.’
FCOT shares closed unchanged at 21 cents yesterday.
FCOT – DBS
One in the Bag
Story: The much awaited re-financing of Frasers Commercial Trust (FCOT)’s short-term S$70m loan expiring in Nov’08 has been finalized. The loan was obtained from their parent F&N for a period of 6 months to March ‘09 at a cost of 3.7%. The manager aims to refinance this loan together with the S$550m tranche expiring in 2009. Given the strong backing of F&N as its sponsor, we believe that re-financing of these loans should not be a problem.
Point: During our post results road show and results briefing, these issues were highlighted.
(1) strategic review continues. Management of FCOT will be keen to divest its Japanese exposure (valued at S$228m) when the opportunity arises. This is astute given the parent’s relatively lack of exposure in Japan. Its Australian assets remain as part of FCOT plans moving forward, given its strong underlying cash flow.
(2) the need to re-capitalize and a stronger balance sheet. At gearing of 49% vs S-Reits 30+%, FCOT’s high financial leverage not only incurs high debt servicing costs but also exacerbates the perceived risk given the current tight liquidity environment. We believe that ways that management could explore in solving the current gearing issue will be through (i) an asset sale, possibly Japanese assets, (ii) equity raising either from a straight asset swap or fresh equity call.
(3) Improving operational performance. Management will continue to optimize yields at its assets, particularly Keypoint where occupancy has fallen to 75% in Sept’08. Management aims to bring it up to 90% by end FY09.
Relevance: While FCOT remains one of the cheapest reits at 0.2x P/BV, the overhang of its ST debt re-financing needs with an overhang from a possible equity raising could likely weigh on share price performance in the near term. As such, we maintain HOLD, TP $0.31, pending affirmation of abovementioned plans.
FCOT – SGX
Frasers Commercial Trust refinances short term debt
Under the terms of the Loan Agreement, F&NT has today extended S$70 million to the Borrower which has been utilised for repayment of S$70 million of Loan Notes issued to the Commonwealth Bank of Australia, Singapore Branch..
The Loan, which is made on normal commercial terms and on arms’ length basis, is for an initial period of six months and with an interest rate of 3.73% per annum.
The Manager is in discussions to refinance the Loan together with all debt maturing in 2009 and will update the market at the appropriate time.
MI-REIT – BT
Marginal fall in value of 5 MI-Reit properties here
Its only warehouse property in Japan revalued upwards by 13.4%
MACARTHURCOOK Industrial Reit (MI-Reit) has seen the valuations of five Singapore properties fall 1.3 per cent to $141.6 million from $143.4 million a year ago.
The properties are at Joo Seng Rd, Gul Way, Changi South Lane, Changi South Avenue and Tuas Avenue 20.
In a statement yesterday, MI-Reit said it recently obtained new independent valuations for eight properties – seven in Singapore and one in Japan.
The other two Singapore properties – at Tuas Avenue 2 and Admiralty Rd – in this revaluation exercise were unchanged in value at $23 million and $14.8 million respectively.
The Japanese property – Asahi Ohmiya Warehouse in Japan – was revalued 13.4 per cent higher at $33.1 million, up from $29.2 million a year ago.
MI-Reit has 21 properties – 20 in Singapore and one in Japan.
It said the valuation exercise increased its portfolio value to $559.9 million as at Nov 15. A year ago, when it had 13 income-producing properties, the portfolio was valued at $370.8 million.
In September, MI-Reit said it had obtained valuations for seven other Singapore properties. None of these had fallen in value, though four were unchanged. Collectively, the seven properties had a total value of $227.6 million at Sept 1, up from $226.3 million a year earlier. This was a 0.6 per cent increase.
According to a report by Colliers International, average capital values of prime freehold factory space and warehouse space in Q3 2008 remained largely unchanged.
Colliers estimated prime freehold factory space to have remained at $548 per sq ft (psf) and $437 psf for ground and upper-floor space respectively. Prime freehold ground and upper-floor warehouse space was estimated at $521 psf and $392 psf respectively.
MI-Reit – BT
MacarthurCook Investment Managers (Asia) Limited, the manager of MacarthurCook Industrial Reit (MI-Reit), said eight of its properties have been revalued at S$212.5 million on Nov 15, 2008, up 2.1 per cent from S$210.4 million a year ago.
The revaluations have increased MI-Reit’s total portfolio value to S$559.9 million on Nov 15, 2008.