Month: July 2011
KGT – BT
K-Green Trust posts Q2 profit of $4.4m
K-GREEN Trust registered profit after tax of $4.4 million for its second quarter ended June 30.
Profits for H1 were $7.9 million, 16.9 per cent higher than the projected $6.8 million.
Q2 revenue was $25.9 million while revenue for the first six months of the year was $44.1 million, 15.8 per cent higher than the $38.1 million projected for the period.
The higher revenue contributions during the first six months were due to a $4.1 million increase in construction revenue from its Senoko Waste-to-Energy (WTE) Plant, and $1.9 million higher operation and maintenance income.
K-Green Trust is Singapore’s only listed green infrastructure trust and pays distributions from residual cash flow.
K-Green has three assets, namely Tuas design-build-own-operate Plant, Ulu Pandan NEWater Plant, and the Senoko WTE Plant.
K-Green has no external borrowings. Cash generated from K-Green’s operations for its second quarter was $6.9 million while that for H1 was $21.7 million.
After taking into account interest, taxes and working capital, total distribution payable for H1 was $19.7 million.
Distribution per unit (DPU) for H1 was 3.13 cents, in line with the forecast amount in its introductory document.
K-Green is on track to fulfil its forecast 7.82 cents full-year DPU.
Net asset value per unit as at June 30, 2011, was $1.13.
K-Green closed down a cent to $1.065 yesterday.
K-REIT – BT
K-Reit Asia’s distributable income up 19.7% in Q2
It will pay up to A$169.8 million for stake in Sydney office building
K-REIT Asia yesterday reported a higher distributable income for the second quarter and said it is buying a stake in an office building in Australia for A$154.4 million (S$203 million) to A$169.8 million.
For the quarter ended June 30, K-Reit’s property income had actually dropped 22.2 per cent over the year to $18.1 million, largely from the sale of Keppel Towers and GE Tower in December last year. Net property income fell 22.2 per cent to $14.3 million.
However, a larger interest income lifted K-Reit’s earnings. It also benefited from a higher share of results of associated companies. This line item brought in $8.3 million – more than three times the $2.4 million last year – from the inclusion of a one-third interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall.
Distributable income to unitholders eventually came up to $26.3 million, up 19.7 per cent over the year. Distribution per unit (DPU) rose 17.7 per cent to 1.93 cents. The annualised DPU in Q2 was 7.74 cents. This works out to a distribution yield of 5.8 per cent, based on K-Reit’s closing unit price of $1.33 as at June 30.
For the half-year, K-Reit’s distributable income to unitholders rose 27 per cent from the previous year to $50.5 million, and its DPU surged 25.3 per cent to 3.72 cents.
K-Reit has been actively growing its portfolio and its latest acquisition is a 50 per cent stake in 8 Chifley Square, bought from a unit of Australia-listed Mirvac Group.
8 Chifley Square is a 30-storey premium grade office building in Sydney’s central business district. It is due for completion in the third quarter of 2013 and will have an estimated 205,700 square feet of net lettable area.
K-Reit will pay A$154.4 million to A$169.8 million, depending on what the committed rental rates are when 8 Chifley Square is completed. The seller will also provide a five-year rental guarantee, if the property is not fully leased at pre-agreed rental rates when it is completed.
K-Reit estimates that the acquisition would have generated an incremental DPU of 0.07 cents – a 1.1 per cent accretion on a pro forma basis for financial year 2010.
On the stock market yesterday, K-Reit closed unchanged at $1.33.
A-REIT – BT
A-Reit’s DPU down 5% with more units issued
ASCENDAS Real Estate Investment Trust (A-Reit) has reported a 4.4 per cent year-on-year rise in total amount available for distribution to $65.9 million for its first quarter ended June 30, 2011.
But the industrial Reit’s distribution per unit (DPU) dipped 5 per cent to 3.2 cents, mainly due to an 11.1 per cent increase in the number of units outstanding as a result of new units issued in the first quarter of this financial year. Gross revenue for the quarter ended June 30 grew 5.6 per cent year on year to $119.9 million, contributed mainly by new investments. But operating expenses were higher because of higher utilities cost, resulting in net property income rising just 1.6 per cent to $8.88 million.
The fiscal first quarter saw A-Reit’s occupancy rate rising to 92.5 per cent for its multi-tenanted properties and 96.2 per cent for its portfolio, up from 92.1 per cent and 96 per cent respectively.
‘Positive rental reversion was seen throughout all segments as a result of the improvement in the industrial rental market,’ said Tan Ser Ping, CEO and executive director of A-Reit’s manager Ascendas Funds Management (S) Ltd.
With improving industrial rental market, A-Reit could also benefit from leases that are up for renewal.
For the balance of the financial year ending March 31, 2012, the Reit has 10 per cent of its revenue due for renewal. The majority of these leases have passing rents that are below the existing market rents. Looking ahead, A-Reit expects global growth to moderate and Singapore’s economic outlook to remain positive in the second half of this year.
With its diversified portfolio as well as a good mix of properties with long and short-term leases, A-Reit expects to sustain its current performance.
The Reit will continue to seek investments with good fundamentals and potential asset enhancement opportunities to complement its existing portfolio and to further enhance its footprint in the business space and industrial property arena with the portfolio comprising predominantly Singapore-based assets in the foreseeable future, the Reit’s manager said.
The counter ended trading yesterday down two cents at $2.14.
Sabana – Phillip
Global largest listed Shari’ah compliant REIT
Trust profile
Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) is a Singapore-based REIT with a mandate to invest in income-producing industrial real estate and real estate-related assets in Singapore and Asia with compliance to Shari’ah investment principles. Sabana REIT is the first fully certified shari’ah-compliant REIT to adopt Gulf Cooperation Council (GCC) Shari’ah Compliant standards, and provide access to Islamic equity markets and diverse investor base.
Investment merits
• Revaluation surplus offers potential upside to net asset value per share (NAVPS) and may act as a re-rating catalyst to share price.
• Freight Link’s expertise in chemical warehouse & logistics give them an edge over its peers.
• Triple net master lease structures provide some form of security as the rental income is locked-in and likely to be stable and visible for the next three years.
• The adoption of GCC standards Shari’ah compliance provides additional access to Islamic equity market that is untapped by Shari’ah compliant REITs listed in Malaysia.
• Ample debt headroom leaves Sabana REIT in good position to take advantage of acquisition growth.
Potential risks
• Renewal of master leases in 2013 may pose a challenge to the management as 60% of the master leases based on the gross revenue will be expired in 2013.
• Listing of more Islamic REITs may compete with Sabana REIT. This may turn on the battle for the flow of funds from the Islamic equity market.
• Uncertainties in global economies could moderate Singapore economic growth. Manufacturing sector may experience a tepid expansion compared to last year.
Valuation
In view of the short land tenure for industrial properties, we ascribe a 9.5% discount rate to Sabana REIT. We initiate coverage on Sabana REIT with a fair value of $1.11, representing a potential upside of ~29% with the inclusion of FY11 dividend yield of 10%. The revaluation of properties this year is expected to increase owing to the buoyant industrial property market. We therefore opine that an increase in book value may act as a re-rating catalyst to the share price. With Sabana REIT set forth to cross $1 billion portfolio by the year end, further upsides are expected in the 2H 2011 to drive up the share price. Future acquisition is not priced into the model.
CRCT – DBSV
Strong SGD mute performance
• Robust revenue growth from strong rental reversions, but net impact eroded by strong SGD
• Healthy leasing market backed by AEI efforts and strong consumption
• Maintain Hold, S$1.29 TP
2Q11 in line. Gross revenue (in RMB) grew 10.9% yoy and NPI 11.3%. But a 7% stronger SGD led to smaller 3.8% and 4.1% reported numbers, respectively. The trust also recorded a 4.8% revaluation gain from Dec 2010. Excluding that, 2Q11 DPU increased by 3.9% to 2.15cts. Result was relatively flat qoq.
Reaping asset enhancement benefits. CRCT’s malls saw stronger 17% rental reversions for 104 new and renewal leases in Q2. Occupancy was stable at 98.1%. Tenant sales jumped 29.9% yoy (+2.1% qoq) on improving shopper traffic (+14% yoy, +2.5% qoq), supported by China’s robust consumption trend and growing urbanisation. The trust has another 320 leases, or 11.5% of gross income up for renewal in 2H11. With Saihan Mall in its 1st rental reversion cycle, and Wuhu and Xizhimen malls enjoying the benefits of earlier asset enhancement efforts, CRCT should continue to see positive rental reversions. The purchase of New Minzhong Leyuan Mall is completed and will see maiden contribution in 3Q11. Meanwhile, the trust has also successfully refinanced its RMB onshore term loan with an unsecured 3-year onshore term loan at a slight premium to PBOC rate.
Maintain HOLD, $1.29 TP. Balance sheet remains robust with 29.7% gearing post-placement. We nudged down DPU by <1% after imputing the enlarged unit base, which lowered our DCF value by 1ct to S$1.29. We are pleased with the result of the trust’s efforts to revamp its malls into multi-tenanted properties for better leverage to rising rents and retail sales, but its near term performance is likely to continue to be affected by the strong SGD.