Month: February 2012
MCT – CIMB
Organic growth
3QFY12 was boosted by stronger year-end GTO rentals at VivoCity. With strong 25% rental reversions for committed retail leases and contributions from the newly-opened ARC, MCT’s organic growth should be one of the strongest among S-REITs.
3Q/9M12 annualised DPU is slightly above consensus and our estimates, at 27/78% of our FY12 on lower borrowing costs. We raise DPU by 2-4% on reduced borrowing costs and thus our DDM target price (disc. rate: 8.6%). Maintain Outperform.
Robust rental reversions at VivoCity
We expect strong rental reversions at VivoCity, backed by strong shopper traffic (+15%) and tenant sales (+9%) and an under-rented portfolio. 3QFY12 NPI grew 6% qoq and 9% yoy on higher passing rents during renewal and year-end GTO rentals at VivoCity. Positives were stronger YTD rental reversions of 25% (over preceding rentals, 2Q: 20%) for its retail leases as occupancy remained nearly 100%. Substantial leases will be due in FY13 and management has started discussions as early as 10 months ahead of expiry, noting good demand from existing and prospective tenants.
Maiden contributions from Alexandra Retail Centre
Its newly-opened ARC (in mid-Dec 11) contributed to 3QFY12. While occupancy and commitments were fairly low at 36% and >55% (of NLA) respectively due to its earlier commencement, we expect these to rise with management in close discussions with several prospects.
Stable office performance
The completion of ARC has added 15k sf to MCT’s office portfolio. Excluding this, occupancy at PSA Building has climbed to 95.1% from 92.7% the last quarter. We understand that while tenants are increasingly cautious, asking rents are still stable. The commencement of ARC could provide additional impetus for the leasing momentum at PSA Building.
MCT – BT
MCT Q3 DPU beats forecast by 15.5%
MAPLETREE Commercial Trust (MCT) posted a distribution per unit (DPU) of 1.428 cents for the third quarter ended Dec 31, 2011, beating its forecast of 1.237 cents by 15.5 per cent.
This translates to an annualised yield of 6.7 per cent, based on MCT’s closing price of 85 cents on the last trading day of 2011.
Gross revenue of $49.7 million for Q3 exceeded forecast by 4.4 per cent and was 10.7 per cent higher than the unaudited pro-forma gross revenue for the same period the previous year following stronger revenue streams from VivoCity, new contributions from Alexandra Retail Centre (ARC) as well as tenants taking up additional space in PSA Building.
Consequently, net property income (NPI) rose 9.3 per cent to $33.8 million from $30.9 million in the corresponding period a year back (based on pro-forma numbers).
Cumulatively, from the commercial real estate investment trust’s (Reit) April listing date till Dec 31, 2011, a gross revenue of $127.4 million was recorded, up 4.9 per cent year-on-year due to stronger revenue flows from VivoCity and positive rent renewals.
Correspondingly, NPI also climbed 5.5 per cent to $88.2 million year-to-date and distributable income rose to $69.2 million, up 25.2 per cent on the back of higher net income and non-tax deductible items that were not factored in the pro-forma numbers.
So far, the DPU for the period spanning April 27, 2011 to Dec 31, 2011, stands at 3.717 cents, beating the IPO forecast of 3.334 cents by 11.5 per cent.
MCT’s total portfolio was also recently valued at $2.9 billion as at Nov 30, 2011, by DTZ Debenham Tie Leung (SEA) Pte Ltd, which triggered a revaluation gain of $62.4 million in the Reit’s books.
Gearing also improved by declining to 37.7 per cent from 38.5 per cent previously.
Going forward, management expects MCT’s portfolio which is located along the ‘Southern corridor’ of Singapore to benefit from the opening of MRT stations on the Circle Line extension, while the mix of office and retail together with a diversified tenant base would reduce risk and offer sustainability of earnings.
MCT ended trading unchanged at 86.5 cents yesterday.
CDL H-Trust – BT
CDLHT’s DPU rises 5.8% in fourth quarter
Its S’pore hotels, excluding Studio M, post Q4 RevPAR of $205, up 6%
CDL Hospitality Trusts (CDLHT), which has posted a 5.8 per cent year-on-year rise in distribution per stapled security for Q4 2011, continues to look for acquisition targets in Asia Pacific markets.
‘Singapore still remains our favourite market in terms of visibility and prospects,’ said Vincent Yeo, CEO of M&C Reit Management, the manager of CDLHT, at a media briefing yesterday.
The stapled group posted distribution per stapled security of 2.94 cents for Q4 2011, up 5.8 per cent from the same year-ago period. Over the same period, CDLHT’s gross revenue rose 13.4 per cent to $37.8 million – thanks to improved hospitality performance across the portfolio and contribution from Studio M Hotel in Singapore, which was acquired in May last year
Net property income for Q4 improved 12.7 per cent year-on-year to $35.5 million.
The stapled group, which makes semi-annual payouts, will distribute 5.71 cents per stapled security for the July 1-Dec 31, 2011 period, or 7.5 per cent higher than the same year-ago period. The payout for H2 2011 will comprise 5.33 cents of taxable income and 0.38 cent tax-exempt income. The counter ended 6.5 cents higher at $1.775 yesterday.
The group’s Singapore hotels achieved strong performance for Q4 as well as full-year 2011. Fuelled by the growth in visitor arrivals, revenue per available room (RevPAR) of the hotels here, excluding Studio M, rose 6 per cent year-on-year to $205 in Q4 2011, the highest Q4 RevPAR since CDLHT’s inception in 2006, supported by high average occupancy of 88.6 per cent in the quarter. Including Studio M, the RevPAR for the Singapore hotels increased 6.1 per cent to $200 in Q4 2011.
Full year 2011, the Singapore hotels’ RevPAR (excluding Studio M) climbed 6.9 per cent to $204, just a tad below the all-time high annual RevPAR of $207 achieved in 2008.
This was despite an increase in hotel room supply in Singapore and room nights being taken out of Orchard Hotel’s inventory during the year for refurbishment. Excluding Orchard Hotel, the RevPAR growth would have been higher at 10.2 per cent in FY 2011 compared to a year ago.
The group’s five Australian hotels – in Brisbane and Perth – also continued to perform strongly, bolstered by the buoyant natural resource sector and static supply of hotel rooms.
Full-year 2011 gross revenue rose 15.4 per cent to $141.1 million. Net property income improved 17.5 per cent to $135.2 million. Distribution per stapled security climbed 8.3 per cent to 11.05 cents.
Last year, the group finished refurbishing the 331-room Claymore Wing of Orchard Hotel. By mid-January 2012, it also completed upgrading all the rooms at Novotel Clarke Quay. Asset-enhancement initiatives this year are likely to focus on less ‘visible’ back-of-house works like chiller replacements to boost hotel efficiencies and create energy savings, says Mr Yeo.
Last year, CDLHT retained 10 per cent of its income available for distribution as working capital to fund capex on asset enhancement initiatives, resulting in a payout ratio of 90 per cent. A ‘good guide’ on 2012’s payout ratio is the low-90s, says Mr Yeo.
M&C Reit Management acknowledged that the outcome of the European debt crisis, the depth of the recession in some European countries and the health of the US economy may have an impact on Asian economies which may affect visitor arrivals and the hospitality sector.
‘There are indications in the market that some companies are exercising caution about travel budgets in view of the economic uncertainty,’ it added.
On the flip side, the range of new attractions in Singapore – including the first phase of the Gardens by the Bay and the River Safari – as well as the stronger events calendar in 2012 could continue to draw visitors to Singapore, it added.