Month: April 2010
Suntec – SGX
Suntec REIT achieved Distribution Income of S$45.37m for 1Q FY10 Distribution per unit of 2.513 cents
Singapore, 27 April 2010 – ARA Trust Management (Suntec) Limited, the Manager of Suntec Real Estate Investment Trust (“Suntec REIT”), is pleased to announce a distribution income of S$45.37 million for the period 1 January to 31 March 2010 (“1Q FY10”), which is a marginal dip of 2.1% compared to the quarter ended 31 March 2009 (“1Q FY09”). The distribution per unit for the quarter amounted to 2.513 Singapore cents at an annualised yield of 7.6%
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Rickmers – BT
Rickmers cuts Q1 DPU by 73% to conserve cash
It expects funding issue to be resolved with recent signing of 2 term sheets
RICKMERS Maritime kept its income distribution conservative in continued efforts to conserve cash with a distribution per unit (DPU) of 0.57 US cents – 73 per cent lower compared to Q1’09 – for the first quarter ended March 31.
However, its management stressed that the trust has recently signed two important term sheets that are finally expected to resolve its funding issues.
Last week, Rickmers announced that a term sheet has been signed with its lending banks for a five-year extension of its US$130 million top-up loan facility – which matures April 30 – and a waiver of its value-to-loan covenants for up to three years.
Another term sheet has also been signed with Polaris Shipmanagement Company, which is a wholly owned subsidiary of the Rickmers Group, to discharge the trust from its obligations to purchase three 4,250 TEU and four 13,100 TEU container ships worth US$918.7 million.
As such, it will pay Polaris compensation of US$64 million, of which US$15 million will be paid in cash and the balance converted into an interest bearing convertible loan to the trust, maturing in 2014.
During the quarter, income available for distribution slipped 8 per cent to US$17.93 million while net profit took a 51 per cent tumble to US$5.43 million, mostly due to US$5.3 million of unrealised losses from two of its interest rate swaps. Earnings per unit were 1.28 US cents, down from 2.61 US cents.
Charter revenue was 14 per cent higher at US$37.16 million compared to the previous corresponding quarter, thanks to maiden contribution from its 4,250 TEU containership Hanjin Newport, as well as full-quarter contributions from two 4,250 TEU vessels.
The Kaethe C Rickmers, a 5,060 TEU containership (formerly Maersk Djibouti), has also been fixed on a 12-month charter, although at a lower rate.
The trust continued to maintain a high level of efficiency on the operations front with no off-hire days in Q1’10, Rickmers said.
Cash flow from operating activities increased by two per cent to US$27.64 million thanks to higher charter revenue, though this was offset by increased expenses.
‘With the return of consumer demand we have good reason to remain cautiously optimistic about the prospects of the container shipping industry. Our focus in the coming months is to finalise documentation and seek the necessary approvals to conclude the various agreements with our creditors,’ highlighted Thomas Preben Hansen, CEO of trustee-manager Rickmers Trust Management.
Rickmers Maritime’s portfolio currently comprises 16 containerships, of which 15 are chartered out for periods of between seven and 10 years.
FCT – Daiwa
Potential price drivers are well known
What has changed?
• Frasers Centrepoint Trust (FCT) announced its 2Q10 (FYE June) results on 23 April 2010. The distribution per unit (DPU) of 2.06¢ was 1.5% above forecast.
Impact
• Gross revenue was 1.6% better than our forecast, due largely to higher-than expected (non-rental) revenue from Causeway Point, while net-property income (NPI) was 5.9% above our forecast due to lower-than-expected operating expenses at Northpoint and Anchorpoint (as well as the revenue from Causeway Point). FCT achieved an average rental-reversion increase of 6.6% for renewals and new leases for the quarter. The contributions from the new acquisitions were in line. Higher-than-expected management fees, borrowing costs, and the retention of about S$1.1m in distributable income offset the strong showing at the NPI level.
• We have revised up our DPU forecasts by 0.7-1.7% for FY10-12, after revising up our NPI forecasts by 1.2-1.8% and adjusting downward our net tax adjustments assumptions. Our forecasts do not include any asset-enhancement initiative (AEI) assumptions for Causeway Point. The manager indicated that it expects to announce plans for this project before the next results briefing. The manager expects the construction of Bedok Point (by the sponsor) to be completed in early 4Q10. FCT acquired Northpoint 2 and YewTee Point from the sponsor about one year after they were completed. Given the relatively minor DPU accretion for these two acquisitions (based on the circular forecast), we have not included Bedok Point in our forecasts or valuation.
Valuation
• We have raised our six-month target price, based on our parity to our RNG (a finite-life Gordon Growth model) valuation, to S$1.46 from S$1.44. Our valuation assumes an effective cap rate of 5.25% (a discount rate of 7.75% and an internal growth rate of 2.5% for the remaining leasehold period) for FCT’s portfolio. For Causeway Point, we have assumed a mid-cycle passing rent of S$11 psf.
Catalysts and action
• We maintain our 3 (Hold) rating for FCT, which looks nearly fully-valued (already trading at an 18% premium to its NAV as at 31 March), given the marginal upside to our target price. We also believe the potential unit-price drivers (Causeway Point AEI and Bedok Point acquisition) are well known.
MLT – Daiwa
NPI and borrowing costs below expectations
What has changed?
• Mapletree Logistics Trust (MLT) announced its 1Q10 results on 22 April 2010. Net-property income (NPI) of S$45.77m was 4.0% below our forecast, while distribution per unit (DPU) of 1.50¢ was 3.5% below our forecast.
Impact
• NPI was the major negative variance. Overall occupancy (at 98%) and the arrears ratio (at 1% of annualised gross revenue) were stable. Rental reversions for 1Q10 (3% of the total portfolio and 22% of renewals for 2010) were flat. We believe part of the shortfall was due possibly to a timing issue, as MLT acquired two properties, CEVA (Changi South) in Singapore and Shonan Centre in Japan, in the latter half of the quarter.
• The biggest positive variance was borrowing costs, 14.8% below forecast. MLT’s weighted average annualised interest rate declined to 2.5% as at 31 March 2010, compared with 2.6% as at 31 December 2009. To date, the manager has refinanced S$60m of the S$204m debt due in FY10.
• We have revised up our DPU forecasts by 2.3% for FY10, 0.9% for FY11, and 0.9% for FY12 after adjusting down our NPI assumptions by about 0.3% and borrowing costs by about 11%. Our forecasts do not include any acquisition assumptions.
Valuation
• We have raised our six-month target price, based on parity to our RNG valuation (a finite-life Gordon Growth model), to S$0.87 (from S$0.84) after lowering our core-operating income and cost-of-debt assumptions. Our valuation assumes a blended, effective cap rate of 6.9% (consisting of a discount rate of 8.4% and an internal growth rate of 1.5%) and a blended cost of debt of 3.3%. MLT’s NAV as at 31 March 2010 was S$0.867.
Catalysts and action
• We maintain our 3 (Hold) rating for MLT as the units look fully valued to us, and we think accretive acquisitions might be hard to come by in 2010.
CRCT – Daiwa
Subdued organic growth, rental reversions
What has changed?
• CapitaRetail China Trust (CRCT) announced its 1Q10 results on 23 April 2010. Distribution per unit (DPU) of 2.14¢ was 1.9% above our forecast.
Impact
• Net-property income (NPI) was 1.6% above our forecast. In local currency terms, gross revenue dipped by 0.8% QoQ due to an 11% QoQ drop for the Qibao Mall. NPI (in local currency) was 1.5% above our forecast, with Xizhimen Mall, Anzhen Mall and Wangjing Mall exceeding our forecasts, while Qibao Mall fell short.
• Rental reversions for 1Q10 (involving 52 leases) were subdued at an average of 2.4% above preceding rents. Only Wangjing Mall (21 leases) recorded a positive average rental reversion (of 9.2%). CRCT’s portfolio occupancy improved slightly over the previous quarter to 95.2% from 95.0%. The overall leasing environment appears stable, but still delicate, in our opinion.
• We have revised up our FY10 DPU forecast by 0.5% after revising up our NPI forecast by 0.9%. However, we have revised down our DPU forecast for FY11 by 14.1%. We assumed previously that CRCT would acquire about S$1bn of China-mall properties annually from its sponsor’s private equity funds from the start of FY11. We assume now that these acquisitions will begin from FY12.
Valuation
• We maintain our six-month target price, based on parity to our RNG (a finitelife Gordon Growth model) valuation, of S$1.11. We have assumed an effective cap rate of 6% (consisting of a discount rate of 11% and an internal growth rate of 5% p.a. over the portfolio’s remaining leasehold of 34 years). Our valuation also assumes the inclusion of about S$966m of acquisitions at a yield of 7.5%.
Catalysts and action
• We maintain our 4 (Underperform) rating for CRCT and believe it is on track to record a year-on-year decline in DPU for FY10. Moreover, FY11 could be another listless year for DPU growth, by our estimates, unless CRCT makes a major accretive acquisition.