Month: June 2010
CDL H-Trust – BT
SINGAPORE – CDL Hospitality Trusts, which owns hotels in Singapore, Australia and New Zealand, said on Wednesday it has raised S$200 million by placing 116.96 million new units with investors at S$1.71 per unit.
The price is at the bottom of the indicative range set by CDL HT on Tuesday, and represents a 9.4 per cent discount to CDL HT's volume weighted average price on June 21.
CDL HT is raising the money to pay off part of its debt.
SREIT – UBS
SREIT valuation guide
Overview
This report summarises the key statistics on valuations, performance, and capital structure of REITs listed on the SGX. We have added a new section (Table 10) on Lease Expiry profiles of SREITs. There are now 22 REITs, with a market cap of US$21.5bn. Year-to-date, SREITs have outperformed Developers by 5.3%.
Key statistics
SREITs are trading at 6.8% 2010E yield (+428bps to 10Y government bond). We expect SREIT DPU growth of 3.3% p.a. (2010-14E), with Hospitality REITs
posting the highest growth at 5.7%. Our price target implies 17.6% upside from the current share price.
Corporate news: Hotels, Retail, PLife acquisitions and Yuan de-pegging
Ibis Singapore, a three-star hotel, has been put for sale via private tender and could fetch cS$200m. The 538-room hotel is owned by the hospitality group, Accor, and LaSalle Investment Management in a 30-70 JV. Meanwhile, the Hong Leong Group CEO (Kwek Leng Beng) is working on a ‘strictly budget’ hotel concept and intends to grow this hotel segment in Singapore and Asia. In retail, the Tanglin Shopping Centre (35%-owned by M&C Hotels) is up for sale with a reserve price of S$1.25bn (S$4167psfppr). On acquisitions, PLife REIT acquired another six nursing homes in Japan for S$60.5m; Japan now comprises 29% of its assets. Finally, REITs with high China exposure are CRCT and Ascott REIT (Table 11).
Top picks: Office landlords and CDL Hospitality Trust
We like office landlords CCT and Keppel Land. We are also positive on CDL Hospitality as a beneficiary of the recovery in tourism.
PLife – UOBKH
Parkway Life REIT has announced that it is acquiring 6 nursing homes and healthcare facilities in Japan for JPY3.9b (S$60.5m). Key highlights are as follows:
- Acquisition is yield accretive. The net property yield of 8.08% is yield accretive compared to current yield of 6.97% of PREIT's existing Japan portfolio. This comes after another acquisition of 8 Nursing homes in Nov 09 for S$77.6m at a property yield of 8.29%. DPU will increase by S$0.16 cents/share in FY 10 and by S$0.32 cents/share from FY 11.
- Downside protection with rental guarantees and longer lease to expiry.Uchiyama and Bonheure, the sellers of the properties, will provide rental income guarantees for the lease period of the nursing homes. The new 20 year leases signed on the nursing homes will improve the average lease term to expiry of PREIT which stands at 13.2 years as of Mar 2010.
- Financed by 2% loan. Acquisition is financed by 5-year unsecured term loan of JPY4.2b (S$64.6m) at a funding cost of 2% pa, versus recent JPY loan of 3.22% secured in Nov 09. This will raise gearing from 28.5% to 32.2%.
- Japan properties form 28.9% of portfolio value The six nursing homes will increase the value of PREIT's Japan portfolio by 21% to S$350.5m and will bring the Japan portfolio to 28.9%, up from 25.2%, of the total portfolio value of S$1.21b.
- Leverage on Japan's ageing population. Japan has the world's fastest ageing population, with 1 of 4 Japanese expected to be over 65 years old by 2025. The acquisitions enjoy high average occupancy of 93.9% as at May 10.
- Clustering and partnership approach to benefit from economies of scale. PREIT is adopting a clustering acquisition approach going forward to reap critical mass for its acquisitions in Japan.
Valuation. PREIT is well-positioned to benefit from the yield accretive purchases and also from the high demand for nursing home space in Japan. We maintain our BUY call with a revised target price of S$1.76 (from S$1.70) based on our two-stage dividend discount model (required rate of return: 7.15% and terminal growth rate: 2.5%).
CMT – BT
Moody’s downgrades CMT-sponsored notes
MOODY’S Investors Service yesterday said that it has downgraded two series of notes sponsored by CapitaMall Trust (CMT) due to insufficient liquidity.
The ratings agency downgraded the US$255.5 million series 25 floating rate notes and the 175 million euro (S$300 million) series 30 floating rate notes to Aa1 from Aaa. The notes are due in April 2014 and are expected to mature in October 2012.
They were issued by Silver Maple Investment Corporation, which is sponsored by CMT – a unit of CapitaLand.
In all, Moody’s placed three series of notes on review for possible downgrades on March 1.
This was prompted by insufficient liquidity, according to the ratings firm’s latest guidelines for Singapore commercial mortgage-backed securities, or CMBS transactions.
Yesterday, Moody’s said that the series 25 and series 30 notes were downgraded. A third set of notes – the US$72.1 million series 18 floating rate notes due in December 2011 were confirmed at Aaa.
Moody’s recently published a guideline saying that the minimum level of liquidity protection should be sufficient to cover the senior payment obligations of a CMBS issuer for at least six months.
The rating of a transaction lacking sufficient liquidity will be linked to the rating of the sponsoring real estate investment trust.
In this case, the risk of insufficient liquidity is because CMT is an operating entity and is not bankruptcy remote. Moody’s said: ‘It has other creditors and if it defaults on those obligations, these other parties can bring legal action, including bankruptcy proceedings, against it. If that happens, there may be cash flow disruption upon a mortgage loan event of default.’
CMT already has the available funds to repay the series 18 notes on the expected maturity date, so the rating for this series was confirmed at Aaa.
But as there is no liquidity for the series 25 and 30 notes, the ratings for these were linked to the rating for CMT. After taking into consideration the notes’ expected maturity in October 2012 and the A2 rating of CMT, Moody’s downgraded the notes to Aa1 from Aaa.
MLT – BT
MapletreeLog completes purchase of 2 properties
MAPLETREE Logistics Trust (MLT) has completed the acquisition of two properties – one in Vietnam for US$6.4 million and the other in Japan for 1.49 billion yen (S$22.8 million).
The purchase price and other acquisition costs were fully funded by debt, given the relatively small size of the acquisitions, MLT said.
The Vietnam property, called Mapletree Logistics Centre, is the trust’s first property in Vietnam.
MLT bought the warehouse, in the Vietnam Singapore Industrial Park in Binh Doung Province, from its sponsor Mapletree Investments.
Vietnam is a ‘market of immense opportunities’, MLT said when it announced the purchase last month.
‘The (trust’s) manager sees Vietnam as an important key emerging market in Asia, with its competitive cost structure and burgeoning middle-class population, which presents attractive growth prospects,’ MLT said in a May 31 statement.
‘With growing demand for logistics space in Vietnam, the manager believes Vietnam will provide opportunities to our valued partners and tenants.’ it added.
The second property, a warehouse in Japan called Sendai Centre, was also bought from Mapletree Investments. It is in Sendai City in Japan’s Miyagi Prefecture.
The net property income yield of Sendai Centre is 6.8 per cent, which is higher than the implied property yield of MLT’s existing Japan portfolio of 5 per cent, MLT said on May 31.
MLT’s counter closed unchanged at 83 cents yesterday.