Month: April 2012
ART – BT
Ascott Q1 DPU stays at 2.14 cents
Annualised yield of 7.8% based on trust's $1.10 price
ASCOTT Residence Trust's first-quarter distribution per unit remained unchanged from a year ago on the back of a modest 6 per cent increase in revenue.
Unitholders' distribution for the three months ended March 31 rose one per cent or $0.2 million to $24.2 million. This translated to a distribution per unit of 2.14 cents, an annualised yield of about 7.8 per cent based on yesterday's $1.10 closing price.
Revenue for the quarter came in at $71.6 million, up $4.3 million or 6 per cent year on year. This was due mainly to contributions from Citadines Shinjuku, which was acquired in December last year, and a better showing from the group's serviced residences in countries such as the Philippines, China and the United Kingdom.
Ronald Tay, chief executive officer of Ascott Residence Trust Management Limited (ARTML), said: "Revenue per available unit (RevPAU) in China, the Philippines and United Kingdom grew by 22 per cent, 15 per cent and 9 per cent respectively over the same period last year, mainly led by better operating performance.
MCT – BT
MCT's Q4 DPU of 1.55 cts beats forecast
Mapletree Commercial Trust (MCT) posted a distribution per unit (DPU) of 1.55 cents for the fourth quarter ended March, beating its forecast of 1.31 cents by 18.4 per cent.
This translates to an annualised yield of 7.0 per cent, based on MCT's closing price of 89.5 cents on April 25.
MCT said the books closure date will be on May 7, and unitholders can expect to receive their distribution on May 30.
The trust was listed on 27 April 27 last year.
FCOT – Lim and Tan
• FCOT has abandoned plan to redevelop Keypoint and instead sell it to a JV between Fragrance and Aspial.
• The property has remaining tenure of 62 years, and the site presently zoned for commercial use, and can potentially yield GFA of 426,421 sf. FCOT had on Aug 15th ’11 obtained approval for a residential cum-commercial development, with maximum gross plot ratio of 5x, or GFA of 391,208 sf.
• The deal between FCOT and Fragrance / Aspial is subject to various conditions, including Singapore Land Authority‘s extending the previous inprinciple approval, or extending terms of lease to a fresh 99 year lease.
• The price is $360 mln before expenses, which works out to $1161 psf, based on current NLA of 309,963 sf. FCOT will realize profit of $72.8 mln from the disposal.
• We would not count on FCOT making a special distribution to its unit holders, as FCOT said it would want to reduce debt, which amounted to $740.3 mln giving a gross gearing of 35.8% at end Mar ’12.
• Note that FCOT’s market price had initially reacted positively to news (in mid August) of the redevelopment plans. Price then was about 80 cents.
• As for Fragrance, which is in the midst of a group restructuring, we would hardly be surprised if management should decide to spend on sprucing up the property and sell it while the demand for office space is strong, as is the case today – witness Oxley‘s namesake development at Robinson Road, or EON Shenton.
• Besides, Hong Fok‘s 360-unit Concourse Skyline in the vicinity still has 130 units unsold (ie 64% takeup), despite getting close to completion next year. It was launched in Sept ’08 at $1600-2000 psf.
• We do not cover the 3 companies.
FCOT – DBSV
Unlocking value in Keypoint
• Sells Keypoint for S$360m or S$1161psf of NLA
• Locks in S$75m gain, lifts book NAV to S$1.44
• Maintain BUY, TP raised to S$1.24
Proposed sale of Keypoint FCOT has announced it has entered into an agreement to sell Keypoint for S$360m or S$1161psf of NLA. The purchaser is a company jointly owned by Fragrance Group Ltd and World Class Land Pte Ltd, a subsidiary of Aspial Corporation Limited. The proposed sale price represents a NPI yield of 3.11% and the buyer is mostly likely going to redevelop the building into a residential/ commercial building. The trust has also received inprinciple approval to refresh the 62-year land lease to 99 years.
Price slightly ahead of our expectations. This is slightly ahead of our earlier expectation of S$322-351m. The sale price is also 26.3% above the latest valuation of S$285m as at Sept 2011. The sale was expected and conducted as part of FCOT’s portfolio evaluation strategy. While we are pleased that Keypoint’s occupancy, as well as rental performance for the asset has been improving, we believe the divestment will strengthen its portfolio profile taking into consideration that Keypoint has a shorter leasehold tenure. At the same time, the proceeds will provide the group greater financial flexibility to pursue acquisitions, repay debt or redeem its upcoming CPPU due for redemption in August 2012.
Locks in $75m gain. FCOT is expected to recognise a gain of S$75m from the sale and we estimate it will boost book NAV by 11 Scts to S$1.44. Assuming the proceeds are used to fully pare down debt, gearing will decline significantly to an estimated 27% from its current 40%. Meanwhile, the trust will see decent interest savings as its current all-in-interest rate is 3.9% vs NPI yield of 3.11%. Keypoint contributed about 11% to net property income in 1H12.
Maintain BUY, TP raised to S$1.24. In terms of earnings impact, while FY12 DPU will dip marginally, FY13 DPU is expected to increase by 7%to 6.9 Scts due to significant interest savings. Meanwhile, DCF valuation is raised by 9% to $1.24 with the additional cashflows from the divestment. Maintain BUY with a revised DCF-backed TP of $1.24. We continue to like FCOT for its pro-active steps to reshape its portfolio and strengthen its balance sheet. Rerating catalysts will come from its ability to enhance China Square Central and to improve occupancy, as well as to refinance its S$500m SGD loan due in November this year at a more attractive interest rate.
FCT – OCBC
LAUDABLE SET OF 2Q RESULTS
•2QFY12 results above expectations
•Positive performance to continue
•In search of growth opportunities
2QFY12 DPU at all-time high
Frasers Centrepoint Trust (FCT) delivered a strong set of 2QFY12 results that were ahead our expectations. NPI and distributable income were up 30.4% and 30.6% YoY to S$26.2m and S$21.3m respectively, driven by positive rental reversions of 7.2-12.5% (11% on average), full-quarter contribution from Bedok Point, and strong uplift from Causeway Point (CWP). In addition, DPU rose by 20.8% YoY to a record high of 2.50 S cents, notwithstanding a distributable amount of S$0.7m being retained for the quarter. As a result, 1HFY12 NPI came in at S$51.1m (+31.9% YoY), forming 53.4% of our fullyear forecast, while DPU hit 4.70 S cents (+16.9% YoY), meeting 50.2% of our DPU assumption. This exceeds our expectations, considering that a total of S$2.3m (or ~0.28 S cents) retained thus far may be distributed in the coming quarters.
Temporary dip in occupancy; set to improve
As at 31 Mar, FCT's portfolio occupancy was at 93.5%. This represents a 10.6ppt improvement from 82.9% seen a year ago, but a 4.0ppt decline from 97.5% in the prior quarter. According to management, the fall was attributable to a temporary closure of the food court at Northpoint due to tenant changeover and the commencement of scheduled refurbishment works at levels 5 and 7 of CWP. When the food court reopens in May and the asset enhancement initiatives (AEIs) at CWP complete in Dec, we expect the occupancy at the respective malls to improve substantially.
Maintain BUY
For 2HFY12, FCT anticipates its positive performance to be sustained, as it continues to benefit from positive rental reversions and stronger performance at its malls. While management now reveals that the injection of Changi City Point may not happen in the near future, it is exploring other ways to optimize yields, such as AEIs and joint developments with its sponsor. We note that FCT's aggregate leverage is at a strong 30.9%. This positions the REIT well to pursue its growth plans. Maintain BUY with a revised fair value of S$1.74 (S$1.68 previously) after factoring in the 2Q results.