Month: October 2010
FCOT – DBSV
Waiting for the right time
• DPU of 0.31Sct (+55%yoy,+24%qoq) in line
• Singapore operations stable; Japan remains a drag
• Maintain HOLD with revised TP of $0.19
4Q10 results in line. Gross revenue and net property income was 14% and 16% higher yoy at $29.3m and $23.2m respectively due a full quarter’s contribution from Alexandra Technopark and improved performance at Keypoint with higher occupancy of c81%. On a sequential basis, 4Q10 topline was flattish, dragged down by its Japan property – Cosmo Plaza – which posted a 22% qoq decline in rental income, although NPI rose a marginal 2.3% qoq, helped by lower property expenses. Distributable income net of CPPU dividend amounted to $9.5m (DPU: 0.31Scts), up 24% qoq, thanks to the stronger AUD. The group revalued its properties up by $36.3m or 1.9% at latest cap rates of 4-5% for its properties in Singapore and lowered gearing to 39.6%.
Operations a mixed bag. Occupancy of Cosmo Plaza Osaka dropped to 25.6% with the expiry of lease of a major tenant in Aug 2010. This will continue to be a drag on earnings. Management attributed the non-traditional business location a hurdle to attract tenants. Successful divestment of this asset would improve FCOT’s book NAV and gearing. Meanwhile, Central Park and Caroline Chisholm Centre in Australia should enjoy some reversion upside from rent reviews with step-up clauses in 2011. In Spore, boost in rental income will come from higher occupancy at Keypoint.
Financing could provide earnings uplift in the medium term. Management is also looking at refinancing its debt due in 2012 (100%), given the current attractive interest rate environment, and smoothening out the lumpy loan maturity profile. We believe the group could likely achieve lower than current interest cost of 4.1% upon refinancing and boost bottomline in the medium term. This had not been factored into our existing forecast.
Maintain Hold. While yields of c6.7 – 7.1% is attractive relative to other office peers, re-rating catalyst from further clarity of management portfolio restructuring plans, appears lacking. We are revising our DCF-backed TP to $0.19 as we roll our numbers forward into FY11. Retain Hold call.
ART – BT
Ascott Reit’s Q3 DPU down 4%
ASCOTT Residence Trust (Ascott Reit) has announced a distribution per unit of 1.85 cents for 3Q10, down 4 per cent from 1.92 cents in 3Q09. Excluding the private placement tranche of 419.66 million new units which were issued to partly fund the acquisition of 28 properties in Singapore, Vietnam and Europe, the DPU for 3Q10 would be 1.93 cents. Revenue rose 5 per cent year-on-year to $46.48 million while unitholders’ distribution rose one per cent to $11.95 million. Gross profit fell 4 per cent to $21.12 million, compared to 3Q09.
FSL – BT
FSL Trust’s Q3 DPU drops 36.7%
FIRST Ship Lease Trust has announced a distribution per unit (DPU) of 0.95 US cents for the third quarter – unchanged from the second quarter but 36.7 per cent lower than the year-ago DPU of 1.5 US cents.
The DPU – which represents an annualised tax-exempt yield of 10.3 per cent – works out to a Q3 distribution of US$5.7 million, down 28.6 per cent year on year. The fall was largely due a US$8 million repayment of secured bank loans for the quarter.
Revenue also took a hit from the premature termination of the long-term charters for FSL Hamburg and FSL Singapore – falling 4.9 per cent to US$23.4 million during the quarter due to the loss of US$3.8 million in bareboat charter revenue from the two tankers.
The tankers were arrested in China and Japan respectively by Daxin Petroleum in June on claims Daxin had not been paid by the ships’ lessees for the bunker that it supplied to the vessels.
FSL Hamburg and FSL Singapore were known as Nika I and Verona I, respectively, at the time of their arrest. The lessees of Nika I and Verona I had been Rovina Shipping and Mesino Shipping, respectively.
The trust’s management has since filed a suit claiming losses and damages caused by the arrests of the tankers from Daxin and its officials. The defendants have also filed their defence. ‘Legal proceedings are on-going and there are no material developments at this point,’ the trust’s management said yesterday.
According to it, both tankers were introduced to the product tanker spot market after their re-deliveries during the third quarter and had gained approvals from several oil majors.
‘Despite volatile freight rates in the spot market, the trustee-manager believes the vessels are now well-positioned to attain their full earnings potential,’ said Philip Clausius, chief executive of FSL Trust Management.
For the first nine months, the trust’s DPU stood at 3.4 US cents, 46.9 per cent lower than the previous year’s 6.4 US cents.
Amount available for distribution for the same period fell to US$20.4 million, from US$33 million a year earlier.
‘Asset values have recovered substantially and we are in full compliance with our debt covenants,’ said Mr Clausius.
As of September this year, the trust’s fleet had a charter-free value of US$700.3 million, compared to its outstanding secured debt of US$461.1 million as at Oct 1. This means that the trust has a value-to-loan (VTL) ratio of 152 per cent – satisfying the minimum ratio of 100 per cent stipulated by its credit facility’s debt covenant.
‘Assuming the current charter-free valuation of the vessels remains unchanged, the projected VTL ratio in July 2011 will be 160 per cent,’ the trust’s management said.
FCOT – BT
FCOT’s Q4 property income rises 16%
Distributable income surges 78%; DPU up 55% to 0.31 cents
FRASERS Commercial Trust (FCOT) rounded off its financial year ended Sept 30 with a strong set of earnings.
Net property income for the fourth quarter rose 16 per cent year on year to $23.2 million, boosted largely by contributions from Alexandra Technopark, which FCOT bought in August last year.
Contributions from two of FCOT’s properties in Australia, Central Park and Caroline Chisholm Centre, also grew partly as the Australian dollar strengthened.
Total distributable income was $14.3 million, surging 78 per cent from a year ago. Distribution per unit (DPU) rose 55 per cent to 0.31 cents. Distribution per Series A convertible perpetual preferred unit (CPPU) was 1.39 cents – 2.6 times of 0.54 cents last year.
‘We have been experiencing an increase in leasing activity in the Singapore and Australia properties due to new leases and expansion by existing tenants. This has translated to higher occupancies which will boost the distributable income,’ said Low Chee Wah, CEO of FCOT’s manager.
‘With the recovery in the economy, we have also seen the rental rates increased accordingly.’
At China Square Central, for instance, the committed occupancy rate was 93.1 per cent in September, up from 91.5 per cent in June.
FCOT also enjoyed an increase in its portfolio value. Based on its latest property valuation exercise as at Sept 30, its portfolio was worth $1.96 billion, up 1.9 per cent from the last valuation in 2009.
The trust’s properties in Singapore and Australia posted valuation gains, but those in Japan saw their values slip.
For the full year, FCOT’s net property income was $93 million, rising 25 per cent from last year. Total distributable income shot up by 89 per cent to $53.3 million.
DPU for the full year was 1.12 cents, up 29 per cent; distribution per CPPU was 5.5 cents, some 10.2 times of 0.54 cents a year ago.
FCOT will pay a distribution of 0.5549 cents per ordinary unit and a distribution per CPPU of 2.7575 cents for the second half of the financial year on Nov 29.
The counter closed unchanged yesterday at 16.5 cents.
CMT – BT
CapitaMall Trust posts steady Q3 results
Addition of Clarke Quay in July helps boost revenue 6%
CAPITAMALL Trust (CMT) delivered steady results for the third quarter ended Sept 30, supported by higher rents at its malls and contributions from a property bought in July.
CMT yesterday posted a gross revenue of $148.2 million, which is 6 per cent higher than that a year ago. The bulk of the increase came from Clarke Quay, which CMT bought on July 1.
Higher rental rates for new and renewed leases at other malls contributed to the rest of the increase. The average rental growth rate across CMT’s portfolio from January to September, on a compounded annual basis, was 2.1 per cent. This exceeded the 0.8 per cent for the financial year ended Dec 31, 2009.
‘Growing tourist arrivals, supportive domestic demand and the resultant pick-up in consumer confidence will ensure that the retail market remain positive for the rest of the year,’ said James Koh, chairman of CMT’s manager. CMT’s distributable income to unitholders was $75.2 million, inching up 0.3 per cent from last year. Distribution per unit (DPU) was 2.36 cents, also up 0.3 per cent. The DPU ‘was in line with consensus and our estimates’, said Standard Chartered analysts Regina Lim and Wong Yan Ling in a note. Unitholders can expect to receive the Q3 DPU on Nov 29.
The annualised DPU was 9.36 cents. Based on CMT’s closing price of $2.02 yesterday, the annualised distribution yield works out to 4.6 per cent.
The occupancy rate of CMT’s portfolio was 99.6 per cent as at Sept 30, slipping slightly from the 99.8 per cent as at Dec 31 last year. CMT said that acquisitions, asset enhancements and participation in development projects are some ways in which it will try to grow its DPU.
‘CMT now has $840 million of cash and can invest $1.28 billion in assets before reaching 40 per cent gearing,’ Ms Lim and Ms Wong wrote. Its gearing ratio was 37.2 per cent as at Sept 30, up from 34.8 per cent three months ago. ‘We think management will seek development projects as these provide yield on cost of 6-6.5 per cent compared with typical acquisition yield of 5-5.5 per cent,’ they said.