Month: November 2010
Rickmers – BT
Rickmers posts US$54.6m Q3 loss after compensation hit
RICKMERS Maritime posted a net loss of US$54.6 million for its third quarter ended Sept 30, 2010, against a net profit of US$9.2 million for the corresponding period a year ago.
The blow to the trust’s bottom line was dealt by a US$64 million payment of compensation to Polaris Shipmanagement Company Limited for not taking delivery of seven vessels.
Excluding the one-off payment, profit from operations would have been US$9.4 million for the quarter.
Its income available for distribution for its third quarter slipped 4 per cent, from US$19.2 million to US$18.3 million.
It also posted a 4 per cent dip in charter revenue, from US$38.1 million to US$36.7 million, today.
Rickmers kept its distribution per unit (DPU) at 0.57 US cents, unchanged from its previous three quarters, representing a payout of 13 per cent of income available for distribution.
Year-to-date, the trust posted a 7 per cent drop in income available for distribution, to US$54 million.
Revenue for the same period rose 2 per cent to US$110.2 million.
It recorded a net loss of US$48.5 million for the period, against a net profit of US$25.5 million a year ago.
The trust’s fleet of 16 container ships saw a 99.63 per fleet utilisation rate for the quarter.
The remaining committed charter revenue as at Sept 30 stood at US$785 million.
‘The container market has experienced a real bull run this year, but the peak period has come to an end. We do expect to see a softening of charter rates in the coming months,’ said Thomas Preben Hansen, chief executive officer of Rickmers Trust Management, the trust’s trustee manager.
Sabana – BT
Sabana Reit aims to raise $554m in IPO
Syariah-compliant Reit prices units at $1-1.10
Sabana real estate investment trust (Reit) – Singapore’s first syariah-compliant Reit – is set to offer a rich distribution yield and raise as much as $554 million from its initial public offering, its preliminary prospectus showed yesterday.
The Reit would sell 504 million units, with each unit to be priced within a range from $1 to $1.10 apiece. This excludes the 102 million units that have been subscribed by cornerstone investors, who include FIL Investment Management (Hong Kong), a Bahrain bank and Capital Investment & Brokerage, a subsidiary of a Jordan bank.
The property trust would hold some $850 million worth of 15 industrial properties in Singapore, making it the world’s largest Reit by asset value.
The three syariah-compliant Reits currently available in the region are all listed in Malaysia.
One distinguishing factor of a syariah-compliant Reit is to have at least 95 per cent of the gross revenue coming from businesses that adhere to syariah guidelines, which prohibit links with alcohol, tobacco and pork consumption, for instance.
The Reit manager has projected a distribution yield of 8.02 per cent and 8.05 per cent respectively for 2011 and 2012, based on the maximum offer price of $1.10. By simple comparison, Mapletree Industrial Trust offered a distribution yield of 7.6 per cent for its fiscal 2010.
While high yields are naturally attractive, analysts have warned that yield premium, which also reflects higher risks, may not be sustained for long.
The IPO offer consists a placement of 428 million units to investors that include institutional players, as well as a public offering of 75.5 million units.
Of the units offered to the public, 44.5 million, or nearly 60 per cent of the public offer, will be reserved for subscription by individuals related to Sabana Investment Partners (SIP) – the Reit’s sponsor – who includes management and business associates.
SIP is 51 per cent owned by Freight Links Express Holdings. Blackwood Investment holds 45 per cent, while Tarian Capital Partner controls 4 per cent.
The 31 million units set aside solely for public subscription represent 6.2 per cent of the total 504 million units being sold.
Several of these properties are situated at industrial areas of Loyang, which is near Changi Airport, and Penjuru, which is close to the shipping ports. They include five properties worth $193 million sold by Freight Links, and a facility worth $60 million that was sold by Soilbuild Group.
About 30 per cent of the properties, on a gross floor area basis, are built on the rent-free land sites that was leased from the Urban Redevelopment Authority (URA). Land rent from the URA is paid upfront at the start of the land lease, unlike assets from JTC Corporation, which are subjected to a regular land rent that would be revised annually based on market factors.
The bulk of its forecasted gross revenue for 2011 comes from its high-tech industrial businesses, which makes up 58 per cent of the pie. City Developments, through its unit, is expected to be Sabana Reit’s biggest contributor in revenue terms, making up nearly 40 per cent of the trust’s 2011 forecasted gross revenue.
The trust also expects minimal capital expenditure in 2011 and 2012.
FirstREIT – BT
First Reit in rights issue of $172.8m
FIRST Real Estate Investment Trust (First Reit) plans to make a renounceable rights issue to raise $172.8 million to acquire two healthcare properties in Indonesia.
A total of 345.66 million new rights units will be offered to existing unit-holders on the basis of five rights units for every four existing units, at 50 cents per unit. The issue price represents a discount of 47.4 per cent to the closing price of 95 cents per unit on Nov 4. First Reit units closed unchanged at 98 cents yesterday.
The 160-bed Mochtar Riady Comprehensive Cancer Centre (MRCCC) is being acquired from Wincatch Ltd and the 75-bed Siloam Hospitals Lippo Cikarang (SHLC), from First Reit sponsor PT Lippo Karawaci. The two properties will cost a total of $205.5 million, with the MRCCC accounting for $170.5 million of this.
The net proceeds from the rights issue will be boosted by a new term loan facility of up to $50 million.
First Reit says that the purchase prices of MRCCC and SHLC represent discounts of 19.7 and 13.8 per cent respectively to the average of the properties’ latest independent valuations. They will boost the value of the Reit’s assets by 74.3 per cent to $603.4 million, and the gross floor area of its portfolio by 58.7 per cent to 132,696 square metres.
FCOT – BT
Frasers Commercial Trust (FCOT) said on Tuesday that it is proposing to consolidate every five existing units in FCOT into one unit.
It believes that the consolidation will increase in the theoretical trading price of each consolidated unit as well as improve the market perception and attractiveness of FCOT and its units.
FCOT also believes that the consolidation will reduce the magnitude of volatility of its unit price and market capitalisation due to the minimum bid and ask spread.
Retail REITs – OCBC
Common themes of 3QCY10 results; NEUTRAL
Common themes. At 3QCY10 results, we found a few common themes in the guidance given by the Retail REIT managers: strengthening rents, increased DPUs and asset enhancement/acquisitions. The unifying message was to capitalise on the recovery-cycle that will both strengthen the REITs and also grow distributable income.
Retail rents strengthening. According to CBRE, Prime-Orchard rents remained stable in 3Q10, after seven quarters of contraction, averaging $31.10psf/month. Suburban malls continued to strengthen, underpinned by strong catchment demand, rising 1.8% QoQ to $29.00psf/month. The supply pressure along Orchard/Scotts Roads is also expected to ease as the increase in retail space from 2009/10 is eventually absorbed. With limited supply expected in 2011 and 2012, retail rents there should increase gradually next year, particularly if the nascent recovery in retail sales, which grew 2.3% MoM in July, continues.
Increased DPU. Most Retail REITs reported higher DPU for 3QCY10. We see an average increase of 3.6% QoQ but a decline of -1.7% YoY. The YoY growth was pulled down mostly by Suntec REIT (more issued units) and LMIRT (forex losses and rental guarantees expiry). The remaining Retail REITs, however, were able to ride on the recovery cycle.
Asset-enhancements/Acquisitions. On the organic-growth front, most REITs stepped up or continued their asset enhancement plans. CMT will complete its asset enhancements for Raffles City by Nov while works for JCube and The Atrium are on track to finish in 1Q2012 and 3Q2012 respectively. FCT has completed 3.4% of its refurbishment for Causeway Point. The $72m facelift, announced in July, for the 12-year-old mall will be carried out over a 30-month period. StarHill Global is also looking at enhancements for Wisma Atria, which will add about 40,000sf in 2011. On the acquisition side, Suntec REIT has announced the proposed acquisition of a one-third interest in Marina Bay Link Mall, with approx. 94,464 sq ft of NLA.
Valuations. Retail REITs are trading at an average price-to-book of 0.96x, similar to the broader S-REIT sector. Barring any unforeseen external shocks, prospects for the retail property market are expected to remain positive in the last two months of 2010, leading up to the year-end festivities and school holidays, which traditionally is a peak season for the retail sector. Nonetheless, in view of slower economic growth and weaker demand from the west, we expect retailers to remain cost-sensitive. Any potential quarterly upside in retail rents in 2011-2012 is forecasted to be kept within 3%-5%. We thus have a NEUTRAL rating on the Retail REITs subsector. Top of our pick is StarHill Global with a fair value estimate of S$0.66.