Month: April 2011
MLT – OCBC
1Q11 DPU of 1.55 S-cents. Not stellar but stable results
1Q11 DPU of 1.55 S-cents. Mapletree Logistics Trust (MLT) reported a set of stable results on Thursday. 1Q11 gross revenue of S$62.2m was up 21.1% YoY and 2% QoQ. The yearly increase was mainly due to contributions from the 14 properties acquired in Singapore, Japan, Korea and Vietnam last year. The two acquisitions announced in Mar 2011 were only completed towards the end of 1Q11 and as such, the full effect of the income contributions will only be reflected from 2Q11. 1Q11 revenue was slightly below our expectation but within Bloomberg consensus. 1Q11 revenue met 22.3% of our full-year forecast and 23.8% of consensus FY11 revenue. Distributable income of S$37.5m was up 21.7% YoY and 1.9% QoQ. 1Q11 DPU is 1.55 S-cents, which is up 3.33% YoY but flat QoQ; this represents an annualized yield of 6.9%.
Portfolio Performance. As at 31 Mar 2011, MLT recorded portfolio occupancy of 98.3%, compared with 98.0% in 4Q10, boosted largely by Singapore, Hong Kong and China. However,1Q11 saw the occupancy rate of Malaysia fall from 99.2% to 96.3%. Meanwhile, a total of 81,500 sqm of space had been renewed or replaced, and this accounts for approximately 94% of the total NLA that was due for renewal in 1Q11. The weighted average lease term to expiry for the portfolio is about 6 years with approximately 70% of the leases expiring in 2014 and beyond. MLT also undertook a S$4m enhancement on Multi-Q Centre in South Korea, with the addition of a 3-storey warehouse next to the existing building, thereby increasing total gross floor area by 4,100 sqm. MLT has also identified another Singapore property with underutilized plot ratios and outdated specifications for redevelopment. It is currently firming up the preparations, which will increase the GFA by more than 70,000 sqm. MLT will make the announcement, likely by next month.
Further Acquisitions. MLT adds that it is actively looking at acquiring a warehouse (60,000 sqm and 98% leased) in Malaysia from its sponsor. MLT should be able to complete the acquisition by this year. Going forward, its main acquisition focus will be in Singapore, Malaysia and South Korea, but MLT remains cautiously optimistic on the outlook in Asia. MLT also believes that a significant portion of the future growth will come from its repeat customers. Currently, repeat customers account for 28% MLT’s gross revenue. Reiterate BUY with a reduced RNAV-derived fair value of S$1.00 (prev: S$1.03) on grounds of dampening prospects in Japan (constituted 23.3% of 1Q11 gross revenue.
FCT – BT
Frasers Centrepoint Trust results improve for Q2, H1
FRASERS Centrepoint Trust (FCT) yesterday reported better results for both the second quarter and half year ended Mar 31.
Gross revenue in Q2 rose 2 per cent from the previous year to $28.8 million, with the increase coming mainly from Northpoint 2 and YewTee Point which were bought last year.
Contributions from these malls helped offset the drop in takings from Causeway Point, which is undergoing asset enhancement works.
Net property income slipped 1.3 per cent to $20.1 million. Distribution to unitholders rose 7.8 per cent to $16 million.
Distribution per unit (DPU) in Q2 was 2.07 cents, up slightly from 2.06 cents in the previous year.
For the first half of the year, gross revenue increased 9.5 per cent year-on-year to $56.4 million, and net property income was up 6.7 per cent to $38.7 million.
Distribution to unitholders grew 15.5 per cent to $31 million. As a result, DPU in H1 was 4.02 cents, higher than 3.97 cents a year ago.
FCT’s portfolio occupancy rate in Q2 dropped to 82.9 per cent from 92.1 per cent a quarter ago as refurbishment works at Causeway Point continued. At the mall itself, just about 69 per cent of space was taken up at Mar 31.
Chew Tuan Chiong, CEO of FCT’s manager, said at a briefing yesterday that Causeway Point is now 68 per cent occupied but that should climb gradually to over 80 per cent towards end-June.
Upgrading works were 33 per cent completed in March, and tenants had pre-committed to 99 per cent of space undergoing refurbishment. FCT projects that the average rent at Causeway Point post-refurbishment would be $12.20 per square foot – 20 per cent higher.
FCT is still aiming to acquire Bedok Point this calendar year. The mall opened in December last year and ‘we wanted to see at least some months of stabilisation,’ Mr Chew said.
FCT gained one cent on the stock market yesterday to close at $1.50.
MLT – BT
MapletreeLog distributable income up 21.7%
Properties acquired in Singapore, Japan, Korea and Vietnam last year boost revenue by 21.1%
MAPLETREE Logistics Trust (MapletreeLog) posted a 21.7 per cent year-on-year rise in total amount distributable to $37.54 million for the first quarter ended March 31, 2011, up from $30.84 million.
Gross revenue rose 21.1 per cent to $62.2 million on the back of contributions from 14 properties acquired in Singapore, Japan, Korea and Vietnam in FY10. Net property income (NPI) was 19.4 per cent higher at $54.67 million, as were property expenses, which climbed 34.4 per cent to $7.57 million.
For the first quarter, it will pay out a distribution per unit (DPU) of 1.55 cents, versus 1.5 cents a year ago. The DPU will be paid on May 30.
MapletreeLog, which invests in income-producing logistics real estate and real estate-related assets in Asia, has a portfolio of 98 properties as at March 31, with a book value of about $3.57 billion. Its properties in Singapore, Hong Kong and Japan were the key contributors, accounting for close to 89 per cent of MapletreeLog’s NPI.
Occupancy rate in Q1 improved marginally to 98.3 per cent compared with 98 per cent in Q4. About 81,500 square metres of space – or 94 per cent of the total net lettable area that was due for renewal in Q1 – was renewed or replaced. The weighted average lease term to expiry for the portfolio is about six years with some 70 per cent of the leases expiring in 2014 and beyond.
‘We are currently firming up the redevelopment plan for one property in Singapore. Upon completion of its redevelopment, total gross floor area will increase by more than 70,000 sq m. While the property will not generate any income during the redevelopment period, the resultant yield will provide better returns to MapletreeLog in the long run,’ said Richard Lai, CEO of Mapletree Logistics Trust Management.
He went on to add that they are upbeat on the Asian economy, and that growth this year will continue to come mainly from acquisitions of yield accretive assets.
MapletreeLog closed at 91.5 cents in trading yesterday, up 1.5 cents.
CCT – OCBC
Market Street Car Park Redevelopment finally comes into fruition
1Q11 DPU of 1.84 S-cents. CCT posted its 1Q11 results yesterday, which came in mostly in line with our expectations. Gross revenue met 25.5% of our full-year forecast and was down 10.6% YoY and 1.2% QoQ to S$91m. This was mainly attributed to the reduction in rental income arising from the sale of Starhub Centre and Robinson Point and the lower revenue contribution from Six Battery Road because of expected vacancies to facilitate the asset enhancement works and negative rent reversions. Total distributable income was down 4.1% YoY and 4.7% QoQ at S$52.1m. 1Q11 DPU is 1.84 S-cents, which is 4.7% lower than 1.93 S-cents reported a year ago. On an annualized basis, the latest distribution represents a yield of 5.3%. CCT also repaid the S$100m MTN that was due in Jan 2011 in cash this quarter and brought down its gearing from 28.6% to 27.8%. This gives it comfortable debt headroom of S$663m before hitting the 35% gearing level.
MSCP redevelopment. CCT also announced that it will be jointly developing Market Street Car Park (MSCP) with its sponsor, CapitaLand, into an ultra-modern Grade A office tower. CCT has obtained provisional permission from URA to rezone the premise from “transport facilities” to “commercial use”. The rezoning is subjected to two conditions: (1) payment by CCT of 100% of the enhancement in land value as assessed by the Chief Valuer, and (2) No extension of the existing land lease, which expire on 31 Mar 2073. The total project cost is estimated to be S$1.4b (S$1,944 psf on NLA basis).CCT will have a 40% stake in the JV and capital commitment of S$560m, which will be funded in stages. It will commit S$335m in 2011, and the rest via internal cash resources and debt, keeping pro forma gearing below 31%. The new office tower has a GFA of 887,000 sqft and height of 245m, expected to be completed before end 2014. According to our estimates, CCT’s existing NPI yield in FY10 was approximately 5.46%. CCT has stated that the stabilised yield from the completed development is expected to exceed 6% per annum, which makes the redevelopment yield-accretive.
Reiterate BUY. We are overall positive on the MSCP redevelopment but remain wary that its land lease is only 59 years following completion in end 2014. We also forecast CCT to continue to experience negative rent reversions in 2011 , but this should change in 2012. With its near 100% occupancy and active leasing strategy, CCT is poised to benefit from the rental upside ahead. Reiterate BUY with an increased RNAV derived fair value of S$1.63 (prev: S$1.61).
CCT – DBSV
Redeveloping Market Street Carpark
• Results within street estimates, negative rental reversion kicking in
• Redevelopment of Market Street Carpark provide midterm boost
• Upgrade to BUY with slightly higher TP of $1.59
1Q11 results within expectations. Topline declined by 10.6% yoy and 2.4% qoq to $91m, due to lower revenue contribution from 6 Battery Rd following asset enhancement works as well as negative rent reversions and income vacuum left by the disposal of Starhub Centre and Robinson Point last year. Correspondingly, NPI fell by 9.9% yoy (-1.4% qoq) to S$69.9m. Distributable income dipped a smaller 4.7% yoy to S$52.1m (DPU: 1.84Scts) due to lower borrowing cost.
Negative rental renewals mitigated by healthy leasing activities. Portfolio occupancy remained relatively stable at 98.2% (-1.1% qoq) with the group signing 156,000sf of new office and retail leases in 1Q11. That said, topline will continue to be affected by negative rental reversions for the rest of 2011 with expiring office leases in its 4 major buildings averaging $14.01psf/mth, compared to current market rates of c$8.5-12psf. CCT has a remaining 10.3% of office and 2.1% of retail leases up for renewal in 2011 and another 13% and 6% respectively by 2012.
Redeveloping Market St Carpark gives better returns. The group announced it is jointly redeveloping the Market St Carpark into an office tower with Capitaland and will take a 40% share in the $1.4b project. We believe the projected 6% yield on cost is more accretive than acquiring completed properties at this part of the cycle. Taking into account its share of $560m capital commitments, we expect gearing to remain healthy at c31% when completed. Redevelopment will cut bottomline by 2-4% over FY11-14 on loss of income to DPU yield of 4.7-4.8%. However, earnings will rise by a healthy 24% yoy in FY15 when the development is completed. More importantly, we believe this exercise would be ROE enhancing and lift current BV by 5% based on mark to market value of c$2600psf.
Upgrade to Buy. We upgrade the stock to Buy as we expect this redevelopment to provide share price re-rating catalyst. Our TP is raised slightly to $1.59 and offers 18% total return.