Month: January 2009
CMT – DBS
Still going strong
CMT’s FY08 results were within expectations, lifted by organic improvement amid a fully occupied portfolio. Continued shopper traffic growth despite a weakening spending environment underlines the more resilient suburban retail sector. The stock offers FY09 yield of 9.7%. Near term catalysts from successful rollover of its debt and recapitalising newsflow within the Sreit sector could spur share price. Upgrade to Buy with DCF-backed TP of $1.92.
Continuous organic growth. CMT reported Q4 revenue of $134.5m, +16% yoy and +3.7% qoq while distribution income came in at $60.9m, -2.1% yoy and +0.3% qoq. Topline benefited from The Atrium income and organic improvement within its portfolio. Occupancy remained at c100% and new lease/renewals were transacted at an average 9.3% over preceeding levels. However, a hike in expense ratio to 36% (vs 33% previously) after charging a $4m capital allowance and greater interest cost eroded bottomline growth. Asset values rose by 9% yoy despite a 15- 25bps hike in cap rates, bringing book NAV to $2.41 and gearing 43%.
Locked in >87% of revenue. While retail sales outlook is dampened by the poorer economic outlook and discretionary spending had weakened towards end 08, shopper traffic at CMT malls continued to grow, showing the resilience of suburban malls. In addition, based on committed leases @ end 08, CMT had locked in >87% of its FY08 revenue for FY09. In terms of capital management, the group has $986m of debt due to be rolled over in 2009, of which $876m is maturing in 2H09. The group is exploring options for refinancing and intends to complete its refinancing ahead of the deadline.
Upgrade to Buy. CMT offers investor exposure to the more resilient suburban retail sector. Share price had fallen by 17% since early Jan 09 and is trading at 9.7% yield based on our stillbelow- consensus DPU forecast of 14.4cts. We expect newsflow on both its debt refinancing and removal of overhanging deleveraging concerns in S-reit sector via recapitalisation activities to be a driver to share price performance in the near term.
MapleTree – BT
MapletreeLog distributable income up 44% in Q4
MAPLETREE Logistics Trust (MapletreeLog) yesterday reported total distributable income of $28.3 million for the fourth quarter ended Dec 31, 2008, up 43.7 per cent from last year’s corresponding period.
But the distribution per unit (DPU) of 1.46 cents for the quarter was 18 per cent lower than Q4 2007’s DPU of 1.78 cents.
MapletreeLog attributed the drop to the full quarter impact from dilution following the rights issue completed in August last year.
For the full year, DPU was 7.24 cents, 10.2 per cent higher than last year’s 6.57 cents.
Last year, Chua Tiow Chye, CEO of Mapletree Logistics Trust Management (MLTM), the Reit’s manager, had said that the rights issue would leave MapletreeLog with a ‘robust balance sheet’ which would help make it ‘well positioned to operate in the current more uncertain times’.
Net property income for Q4 2008 rose by $9.8 million to $45.1 million. This was helped by a $12.1 million rise in gross revenue to $52.4 million due mainly to contributions from 11 new properties acquired during the year.
There was also a $1.4 million fall in Q4 borrowing costs despite the enlarged portfolio.
As at Dec 31, 2008, the trust’s portfolio comprises 81 properties valued at $2.9 billion, including a $94.1 million revaluation gain.
No new acquisitions have been planned for the near term.
Singapore properties accounted for close to half of Q4 2008 net property income, with Hong Kong properties contributing about a quarter.
Portfolio occupancy rates remain high at 99.6 per cent. The trust attributed the resilience of its portfolio to a diversified tenant base and strong leasing covenants.
MapletreeLog’s leverage ratio of 38.5 per cent, as at Dec 31, 2008, is marginally higher than the 36.9 per cent as at Sept 30, 2008.
However, it has assured that it has sufficient committed lines to meet its debt obligations when they become due – hence avoiding any refinancing risk.
FirstREIT – BT
First Reit’s Q4 distributable income up 11% to $5.3m
BACKED by higher rentals from its eight properties in Singapore and Indonesia, First Real Estate Investment Trust (First Reit) achieved an 11 per cent rise in distributable income to $5.3 million for its fourth quarter ended Dec 31, 2008.
The year-on-year rise came as gross revenue rose 4.5 per cent to $7.6 million.
Distribution per unit (DPU) for the quarter grew 10.2 per cent to 1.94 cents, from 1.76 cents for the year-ago period.
Based on its FY2008 DPU of 7.62 cents (FY2007: 6.73 cents) and the closing price of 43.5 cents on Jan 20, the distribution yield is 17.5 per cent.
The quarter saw net property income grow 4.1 per cent to $7.51 million, helped by higher rentals from four Indonesia properties acquired in 2006 and four Singapore properties newly acquired in 2007.
For the full year 2008, First Reit – which is Singapore’s first healthcare Reit – reaped net property income of $29.96 million, 12.3 per cent higher than for 2007.
But it recorded a revaluation loss on investment properties of $700,000 compared with revaluation gains of $16.83 million in 2007.
First Reit’s eight properties have a total value of $324.9 million based on a recent annual revaluation, little changed from its book value in 2007.
Bowsprit Capital Corporation, First Reit’s manager, said it is hopeful that First Reit will continue to perform relatively well in 2009.
‘First Reit is hopeful that the demand for quality healthcare, particularly in Asia, will remain relatively unaffected despite the current global recession,’ it said.
FCOT – BT
FCOT may sell assets in Japan, Australia
FRASERS Commercial Trust (FCOT) may sell its assets in Japan and Australia worth over $98 million, as it restructures its portfolio following a strategic review.
The trust said this yesterday as it released results for the fourth quarter ended Dec 31, 2008. Its performance was dampened by rising borrowing costs and higher property expenses.
Net property income for the trust fell 10 per cent year-on-year to $18.6 million in Q4 08. This contributed to a 41 per cent plunge in distributable income to $9.3 million.
As a result, distribution per unit (DPU) dived 43 per cent from a year ago to 1.26 cents. This translates to an annualised DPU of 5.01 cents, and a distribution yield of 21.3 per cent based on FCOT’s closing price of 23.5 cents on Dec 31. FCOT closed 0.5 cent up at 24.5 cents yesterday.
Of its portfolio of 10 assets, FCOT is exploring the sale of Cosmo Plaza in Japan and its investment in the Allco Wholesale Property Fund (AWPF) in Australia. A strategic review which began last August concluded that these assets ‘do not meet the long term investment strategy’ of the trust, said FCOT.
After further write- downs, Cosmo Plaza and units in the unlisted AWPF were valued at $72.6 million and $26.3 million respectively as of Dec 31.
‘Divestments of these assets will be conditional upon a number of factors and appropriate updates to unitholders will be made in due course,’ FCOT said.
On top of the possible asset sales, FCOT also said that it was deferring asset enhancement plans for retail areas in KeyPoint and China Square Central under the current economic and financial market conditions.
‘Management priorities include the refinancing of the trust’s existing facilities and addressing the capital structure of FCOT,’ said Low Chee Wah, CEO of the trust manager Frasers Centrepoint Asset Management (Commercial).
‘We are studying a variety of options and will look to begin implementing them during the course of the year.’
FCOT has $624.5 million of borrowings due in one year or less, and its gearing was 54.4 per cent as of Dec 31.
For FY2008, FCOT’s net property income rose 32 per cent from a year ago to $81 million. Nevertheless, its DPU still registered a 5 per cent drop to 6.35 cents.
CMT – BT
CapitaMall Trust DPU dips in Q4
Trust exploring options to refinance $876.2m of debt
CAPITAMALL Trust (CMT), Singapore’s biggest property trust, said that distributable income for the fourth quarter fell 2.1 per cent as it faced higher finance costs.
Distributable income for the three months ended Dec 31, 2008, was $61 million, down from $62.3 million in 2007. Distribution per unit (DPU) fell to 3.65 cents, from 3.82 cents in 2007.
The trust is a unit of Singapore’s largest property group, CapitaLand. Q4 net property income rose 11.1 per cent to $85.9 million, from $77.3 million in Q4 2007.
Turnover was boosted by Atrium@Orchard, which CMT bought in August 2008, as well as higher revenue from new and renewed leases and from the completion of asset enhancement works.
But finance costs rose 61.4 per cent to $30 million, causing a year-on- year drop in Q4 net income. The increased finance costs were partly due to the convertible bonds CMT issued to fund the Atrium acquisition.
For the full 2008 financial year, distributable income rose 12.9 per cent to $238.4 million, up from $211.2 million in 2007. DPU rose to 14.29 cents from 13.34 cents.
‘The majority of the retail trades across CMT’s portfolio of malls are still faring well for full year 2008, although there were some signs of weakening in discretionary spending towards end-2008,’ said Lim Beng Chee, chief executive of the trust’s manager.
Last year, CMT signed 363 new and renewed leases at average rents 9.3 per cent higher than preceding rentals, which were typically committed some three years ago.
Gross rental revenue locked-in for 2009 already exceeds 87 per cent of 2008’s total gross revenue. ‘This will underpin the net property income for 2009,’ said the trust.
Mr Lim remains confident that CMT’s tenants will continue to stay on in its malls, even as retail sales are expected to drop this year.
The trust will take a pro-active approach to engage its tenants and meet up with them more often, he said.
Mr Lim also pointed out that turnover rent (where CMT takes a cut of tenants’ sales) contributed just 2-4 per cent of CMT’s total gross revenue in 2008.
The trust is also exploring options to refinance $876.2 million of debt before it matures in the second half of 2009.
CMT hopes to refinance all debt in one go and is already in talks with banks. Analysts said that refinancing should not be a problem as another one of CapitaLand’s Reits, CapitaCommercial Trust, was able to refinance at attractive rates recently.
CMT, which owns 14 retail malls in Singapore, last quarter said that it will put some upgrading plans for its properties on hold. The trust in May 2008 also raised its target asset size to $9 billion by 2010 from an earlier forecast of $8 billion.
Yesterday, CMT said that total assets rose 1.9 per cent to $7.2 billion on the latest revaluation.
‘CMT remains one of our top picks in the S-Reit (Singapore real estate investment trust) space,’ said Macquarie Research analysts Tuck Yin Soong and Elaine Cheong yesterday as they issued an ‘outperform’ call on the stock. CMT shares lost two cents to close at $1.48 yesterday.